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Investing.com - DA Davidson lowered its price target on Cars.com (NYSE:CARS) to $13.00 from $13.50 on Thursday, while maintaining a Buy rating on the automotive marketplace stock. According to InvestingPro data, the stock, currently trading at $11.77, appears undervalued based on its Fair Value analysis, with analyst targets ranging from $11 to $25.
The research firm cited more cautious Average Revenue Per Dealer (ARPD) assumptions for 2026, which led to a trimming of its 2026 forecasts by approximately 1%. Despite this adjustment, DA Davidson’s estimates for 2025 remain effectively unchanged. InvestingPro analysis shows the company maintains strong financial health with a robust free cash flow yield and solid growth metrics.
Cars.com has reinstated some topline guidance for the second half of 2025, expecting low-single-digit year-over-year revenue growth, which aligns with Street expectations. The company anticipates growth acceleration in the third and fourth quarters, partly due to a Listings subscription re-packaging initiative that focuses on bundling more services at discounts rather than implementing unit price increases.
Management has affirmed its previous calendar year 2025 expected EBITDA margin range of 29-31%, showing confidence in maintaining profitability levels despite the adjusted growth outlook. The company’s current gross profit margin stands at an impressive 66.62%, demonstrating strong operational efficiency.
The company has also increased its planned stock repurchases for calendar year 2025 from $60-70 million to $70-90 million, signaling continued commitment to returning capital to shareholders despite the slightly lowered growth expectations. This aligns with one of the key InvestingPro Tips highlighting management’s aggressive share buyback strategy, with several more insights available for subscribers.
In other recent news, Cars.com announced its second-quarter 2025 financial results, which showed a slight miss on both earnings per share (EPS) and revenue forecasts. The company reported an EPS of $0.41, which was marginally below the anticipated $0.42. Additionally, Cars.com posted revenue of $178.7 million, slightly under the expected $179.47 million. These results are part of the latest developments surrounding the company. Analyst opinions and stock price movements were not detailed in the report, focusing instead on the earnings figures. The financial performance did not meet market expectations, as reflected in the reported figures. Investors and analysts are closely monitoring these updates for future implications.
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