Roth/MKM has opened coverage of Karooooo Ltd. (NASDAQ: KARO) assigning a buy rating with a $62.00 price objective. That outlook sits alongside a broader analyst consensus from InvestingPro, which shows a strong buy recommendation and target estimates spanning $60.43 to $66.14 - a range that implies up to 36% upside from the stock's current price of $48.57.
The firm highlights Karooooo as a global supplier of fleet management solutions with leading positions in several priority markets. In South Africa the company holds roughly 40% market share, and Roth/MKM points to meaningful footprints in Southeast Asia and Europe as additional anchors for growth.
Roth/MKM projects the company will maintain mid-teens revenue growth, specifically forecasting an approximate 19% compound annual growth rate from 2023 through 2026. The broker notes this projection is consistent with recent performance, citing 18.35% revenue growth over the last twelve months and a roughly 19% five-year revenue CAGR, as reported by InvestingPro.
The initiation report attributes future expansion to underpenetrated geographies and new product rollouts. Examples called out include AI-enabled camera technology - which the firm notes has under 5% penetration - as well as asset tracking tags and logistics-focused offerings that could broaden the company's addressable market.
Roth/MKM emphasized Karooooo's profitability metrics in its analysis, reporting about 68% gross margins and 40% EBITDA margins. InvestingPro data cited in the report corroborates strong profitability with a 69.21% gross margin figure and a 33% return on equity. The brokerage also characterized Karooooo as a "Rule of 50" company trading at roughly 4 times enterprise value to estimated 2026 sales.
On valuation, InvestingPro's assessment indicates the stock is currently fairly valued on its Fair Value metric, with a price-to-earnings ratio of 23.4 and a PEG ratio of 1.45. The initiation was authored by Roth/MKM analyst Scott Searle, according to the firm.
Dividend policy and shareholder returns are noted as well. InvestingPro Tips referenced in the coverage point out that Karooooo has increased its dividend for four consecutive years and currently yields 2.57%.
Recent operating results at Karooooo's Cartrack unit reinforce the growth narrative. In third-quarter fiscal 2026 results, Cartrack reported a 22% year-over-year increase in SaaS annualized recurring revenue (ARR) to ZAR5,106 million. When expressed in U.S. dollars, ARR rose 28% year-over-year to USD298 million. Separately, Cartrack's subscription revenue grew 20% to ZAR1,236 million versus the comparable period a year earlier. Management described these figures as evidence of accelerating growth and record subscriber additions.
In a strategic development, Cartrack announced a partnership with Volkswagen Group Info Services AG to integrate real-time fleet data from six Volkswagen Group brands in Europe into Cartrack's fleet platform. Roth/MKM and InvestingPro highlighted the collaboration as a means to strengthen the company's European service offerings.
Overall, the initiation by Roth/MKM combines the firm's growth forecasts, current profitability measures, and recent operating momentum at Cartrack to support a constructive investment case. InvestingPro's consensus targets provide a range of analyst views that, collectively, imply potential upside from current market levels.