Karooooo (KARO) Stock Forecast & Price Target

Karooooo Ltd has demonstrated significant financial growth, with revenue increasing from 457 million ZAR in FY23 to 649 million ZAR in FY24, highlighting its expanding market presence. The company's continuous innovation within the competitive telematics space is anticipated to enhance customer value and retention, thereby contributing to sustained revenue streams. Furthermore, projections indicate a 15% growth in subscribers by FY26, reflecting a positive outlook for the company's future performance.

Karooooo Ltd is facing significant competitive risks and potential pricing degradation that threaten its subscription growth, which is anticipated to fall below 17%, thereby leading to multiple contraction and lower overall financial estimates. The decline in subscription growth, coupled with a substantial reduction in equipment manufacturing and data costs by approximately 90% over the past two decades, may further exacerbate market pressures on the company's profitability. As a result, these factors indicate a likelihood of multiple compression, with projections suggesting a potential share price fall to $40 or lower in this adverse scenario.