YB new stock pitches (Mon, Mar 17)

Driven Brands (DRVN) trades at 8x NTM EBITDA and has potential for significant growth, driven primarily by its Take 5 Oil Change segment. Take 5 is expected to contribute over 70% of company-wide EBITDA by YE 2026, with strong unit economics and a 4-7% SSS growth algorithm. The Auto Glass Now (AGN) segment presents an opportunity for EV-neutral growth through increased ADAS penetration and insurance customer expansion. A potential sale of the underperforming car wash segment could catalyze a re-rating. Management aims for $835M EBITDA in FY26, while the author projects $762M, 7.9% ahead of consensus. The base case assumes a 43.7% IRR to a $27.66 price target. Risks include EV adoption impacting oil change demand, competitive pressures, high financial leverage, and management turnover. Catalysts include a beat-and-raise cycle, car wash sale, and potential financial resegmentation to highlight Take 5's performance.

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Banca Monte dei Paschi di Siena S.p.A. (BMPS.MI), an Italian bank, recently beat Q3 earnings expectations and raised its full-year guidance. The Italian government sold a portion of its stake, contributing to share price appreciation. The bank has taken steps to reduce interest rate sensitivity and improve asset quality, which is expected to enhance long-term earnings stability, profitability, and balance sheet strength. BMPS.MI now offers a 75% payout ratio, the highest cash yield among European Union banks. Additional upside potential stems from a favorable interest rate outlook, the bank's strong capital profile, robust trading book, and possible consolidation in the Italian banking sector.

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Claranova SE (CLA.PA) is divesting its PlanetArt division to General Atlantic for €150M, focusing on its Avanquest SaaS business, which has 90% subscription revenue and 23% margins. Avanquest's PDF technology is difficult to replicate, and the company expects 2024/25 revenue of €130M with €30M EBITDA. Currently trading at 5x EBITDA and 7.5x P/E, an 11x EBITDA multiple implies a €5.4/share valuation. The potential sale of MyDevices could add €15-20M. Avanquest's revenue has grown 50% since 2019, transforming from 34% SaaS to over 90% today. The company's B2B focus, particularly through pdfForge acquisition, offers growth potential. New management is driving value creation by focusing on Avanquest and consolidating the fragmented PDF market. With the PlanetArt sale proceeds paying off expensive debt and the potential MyDevices sale, Claranova could become a pure SaaS company with organic growth potential and improving margins. The price target is set at €7/share.

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