Why Shares of Boyd Stock Flew Higher This Week

Boyd stock (TSX:BYD) has been rising higher on the back of improving credit and higher analyst ratings, so it could now be a steal.

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The market is heating up. Though some sectors more than others. One beneficiary was Boyd Group Services (TSX:BYD), which saw its shares surge and climb even higher this week. Boyd stock rose 5% on Monday and kept on climbing, though it still remains below 52-week highs.

So, let’s look at what happened with Boyd stock. And if more growth is on the way.

What happened

First, let’s take a look at what caused the surge in share price in the first place. Shares of Boyd stock rose this week primarily due to the company’s announcement of extending its existing revolving credit facilities. This extension increased their credit capacity, providing more financial flexibility and positively impacting investor sentiment. 

Additionally, Boyd Group Services has shown strong revenue growth and continues to attract positive market forecasts, contributing to the rise in its stock price. In particular, Boyd stock reported strong earnings during its recent quarter. 

Boyd stock recently reported its first-quarter 2024 earnings. Sales increased by 10% to $786.5 million compared to $714.9 million in the same period of 2023, driven by contributions from new locations and a 2.2% increase in same-store sales. However, the company’s net earnings decreased significantly to $8.4 million from $20.8 million in Q1 2023. This decline was attributed to mild winter weather impacting demand for repair services and higher costs associated with increased workforce and operational expenses.

Yet the auto collision repair centre operator is aiming to bring down costs. The company spent $4.8 million on network technology upgrades and increased its scanning and calibration workforce by over 60% in the first quarter of 2024, aiming to internalize these services to reduce costs and improve efficiency.

Analysts weigh in

Numerous analysts provided opinions on earnings and now have a positive outlook on the stock. The consensus rating is a “Moderate Buy” with the average 12-month price target of $301.85, with price targets ranging from $225 to $350. This suggests an expected upside of approximately 21.5% from the current price.

Furthermore, several analysts have recently adjusted their price targets. For instance, Raymond James lowered their target from $375 to $350, maintaining a “Strong Buy” rating, while TD Securities lowered their target from $310 to $296, maintaining a “Buy” rating. No matter how you slice it, however, today’s share price offers huge upside.

Looking ahead

So what does the future hold for the stock? The collision repair industry faces challenges such as fluctuating demand and increased operational costs, but Boyd stock’s proactive measures and industry position indicate potential resilience and growth. In fact, the company noted several ways that it should bring in continued growth.

Boyd stock expects sales to grow, driven by both new locations and same-store sales increases. The company has been expanding its presence with additional collision repair locations, contributing to overall revenue growth.

Although the first quarter of 2024 saw a decrease in net earnings to $8.4 million from $20.8 million in Q1 2023, Boyd stock remains confident in its long-term growth strategy. The company aims to double its business size on a constant-currency basis from 2021 to 2025.

All in all Boyd stock looks like a strong stock that’s only getting stronger. So don’t let recent earnings keep you from the climb.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Boyd Group Services. The Motley Fool has a disclosure policy.

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