Jefferies upgrades Carvana stock rating to Buy on digital shift in used car market

Investing.com - Jefferies upgraded Carvana (NYSE:CVNA) from Hold to Buy and raised its price target to $475.00 from $385.00 on Wednesday. The stock, currently trading at $377.24, has shown remarkable momentum with an 85.5% gain year-to-date. According to InvestingPro analysis, Carvana is currently trading near its Fair Value.

The upgrade comes as Jefferies sees Carvana as "best-positioned to benefit from a nascent shift to digital in the massive $800B used car market," according to research published by the firm.

Jefferies raised its 2027 revenue and EBITDA estimates to 15% and 12% above consensus, respectively, after analyzing results from consumer surveys, proprietary web scraping, and capacity analysis that all support continued elevated growth for the online used car retailer.

The new price target implies a 28x EV/EBITDA multiple on 2027 estimates and a 25% premium to peer-based growth-adjusted multiples, which Jefferies justifies by Carvana’s "track record of upside and runway for leading growth."

The firm’s analysis shows approximately 30% of adults would prefer to buy cars online, yet its model conservatively projects Carvana reaching just 10% market share by 2035, representing about 3.5 million units.

In other recent news, Carvana’s second-quarter results have drawn significant attention, with the company reporting an adjusted EBITDA of $601 million. This figure surpassed both JPMorgan’s estimate of $530 million and the Bloomberg consensus of $551 million. Following these results, JPMorgan increased its price target for Carvana to $425 from $415, maintaining an Overweight rating. DA Davidson also raised its price target for Carvana, moving it up to $380 from $260, while keeping a Neutral rating. The firm highlighted Carvana’s year-over-year growth in used vehicle units as a positive factor. Citizens JMP reiterated its Market Outperform rating on Carvana, with a price target of $460, citing favorable industry trends. Meanwhile, Sonic Automotive received attention as Benchmark maintained its Buy rating, with a price target of $80, amid Amazon’s expansion in the automotive marketplace. These developments reflect a period of active analyst engagement with Carvana and related industry players.

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