Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Citi has raised its price target on Carvana (NYSE:CVNA) to $415.00 from $325.00 while maintaining a Buy rating on the stock, citing proprietary data showing stronger-than-expected sales. The new target represents potential upside from the current price of $357.32, though InvestingPro data indicates the stock is trading slightly above its Fair Value.
The investment bank’s tracking of retail unit sales on Carvana.com suggests approximately 142,000 units were sold in the second quarter, representing a 40% year-over-year increase and 6% quarter-over-quarter growth. This figure slightly exceeds the consensus estimate of about 141,000 units and surpasses the company’s guidance, which implied at least 133,898 units. According to InvestingPro data, Carvana has achieved impressive revenue growth of 32.2% over the last twelve months, with total revenue reaching $14.8 billion. The company also maintains a perfect Piotroski Score of 9, indicating strong financial health.
Citi’s analysis also indicates Carvana’s inventory rose 36% year-over-year in the second quarter, a positive sign as greater vehicle selection typically leads to increased demand, faster delivery times, and reduced logistics costs. The firm noted that days on website decreased 12% quarter-over-quarter, potentially signaling stronger consumer demand. The company’s strong operational performance is reflected in its healthy gross profit margin of 21.7% and current ratio of 3.81, suggesting robust working capital management.
Based on these findings, Citi has raised its unit sales and EBITDA projections for the online used car retailer. The bank also removed its "High Risk" designation from the stock.
While Citi’s updated projections suggest Carvana could reach its goal of 3 million retail sales units per year over the next 7-10 years, the bank noted this timeline "could prove conservative given continued execution" by the company.
In other recent news, Carvana has been the focus of several analysts’ updates following its latest performance indicators. Stephens raised its price target for Carvana to $375, citing better-than-expected second-quarter unit sales and increased projections for EBITDA and EPS. The firm noted material price increases and a shift toward younger inventory as contributing factors. Meanwhile, Citizens JMP reiterated a Market Outperform rating with a $440 price target, highlighting Carvana’s growth potential due to its technological advancements and expanding market scale. Jefferies also adjusted its price target upward to $325, based on web scrape data indicating accelerated retail unit growth, although they maintained a Hold rating. BofA Securities increased its target to $375, maintaining a Buy rating and noting Carvana’s potential benefits from a shift in consumer preference from new to used cars. These recent developments reflect the varied yet optimistic outlooks from analysts regarding Carvana’s market position and growth trajectory.
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