Copart, Inc. (MM) (NASDAQ:CPRT)
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5 Years : From Oct 2012 to Oct 2017
Shares of Copart Inc. (CPRT) rose Tuesday after the car-auction company said it earned an exclusive national contract to be the salvage auction provider for auto insurer Allstate Corp. (ALL).
Copart said the agreement with Allstate is poised to further establish its VB2 online-auction service, through which more than 7 million vehicles have been sold. Copart provides vehicle sellers with services to process and sell salvage vehicles. It uses its VB2 technology to remarket vehicles through Internet sales.
CJS Securities analyst Robert Labick raised his rating on the stock to market outperform from market perform and called the deal a "big win" for Copart as the deal shifts all of Allstate's salvaged vehicles to the company.
In recent trading, shares of Copart were up 4.9% to $35.36. The stock hit an intraday high of $35.58 and has risen 4.4% in the last three months.
Meanwhile, shares of competitor KAR Auction Services Inc. (KAR) were down 2.8% to $14.35.
Labick said Copart's deal provides incremental volume, which is the unit of salvaged vehicles auctioned, at time when volume in the industry is decreasing. He estimates that deal could add about 180,000 cars to Copart's volume, increasing its total volume by over 15%.
He said the deal also suggests KAR Auction's Insurance Auto Auction business, which represents 35% of its total business, will decline. He added KAR Auction was already expecting modest growth in volume but with Copart's new partnership, it's believed that KAR Auction's will lose some business.
Representatives from Copart and KAR Auction couldn't be reached for comment.
-By Aja Carmichael, Dow Jones Newswires; 212-416-2187; email@example.com