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Investing.com - BofA Securities has reiterated its Buy rating and $425.00 price target on Carvana (NYSE:CVNA), according to a research note published Monday. The analysis comes as e-commerce giant Amazon (NASDAQ:AMZN), currently valued at $2.26 trillion and maintaining a GOOD financial health score according to InvestingPro, enters the online auto sales market.
The firm’s analysis suggests that while Amazon’s entry into online auto sales could potentially become competitive with Carvana long-term, the overall migration of auto purchases to online platforms may benefit the entire sector. Amazon’s stock has recently experienced a 7.75% decline over the past week, though the company maintains its position as a prominent player in the Broadline Retail industry.
BofA Securities identified several reasons why Amazon’s competition will not impact Carvana in the near term, including Amazon’s limited selection mostly focused on Hyundai (OTC:HYMTF) vehicles compared to Carvana’s broader inventory, potential hesitancy from additional auto brands to join Amazon’s platform due to disintermediation concerns, lack of vertical integration that could lead to inconsistent user experiences, and Amazon’s lack of delivery options reducing convenience. For deeper insights into Amazon’s competitive position and financial outlook, access the comprehensive Pro Research Report available on InvestingPro, which covers 1,400+ top stocks with expert analysis and actionable intelligence.
The research firm noted that Amazon’s current model appears more competitive with third-party listing sites like TrueCar (NASDAQ:TRUE) and CarGurus (NASDAQ:CARG) rather than Carvana’s business model.
BofA Securities did highlight two significant risks for Carvana: the potential for attractive trade-in offers on Amazon that could make the bidding environment more competitive, and Carvana’s current limited access to high-margin Certified Pre-Owned vehicles at scale.
In other recent news, Amazon reported impressive second-quarter earnings that surpassed analyst expectations, with net sales reaching $167.7 billion, a 13.3% increase from the previous year. This figure exceeded the consensus estimate of $162.2 billion by 3.4%. Operating income also rose significantly, climbing 30.6% year-over-year to $19.2 billion, outperforming projections of $17.0 billion by 12.9%. HSBC has maintained its Buy rating on Amazon, setting a price target of $256.00 following these results. Additionally, JMP Securities reiterated its Market Outperform rating and a $285.00 price target, citing enhanced advertising efficiency during Amazon’s Prime Day. A report from MNTN highlighted a 20% year-over-year growth in average revenue per advertiser during the event. In other developments, Amazon announced the closure of its Wondery podcast studio, which will lead to approximately 110 job cuts. As part of this restructuring, Wondery CEO Jen Sargent will depart from the company.
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