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On Thursday, JMP analysts maintained a positive outlook on CarGurus Inc. (NASDAQ:CARG) shares, reiterating their Market Outperform rating and a $38.00 price target. The firm's analysis indicated that year-over-year declines in U.S. website visits have shown improvement on a month-to-month basis. According to InvestingPro data, analyst targets for CarGurus range from $34 to $45, with the company currently trading at $27.95. InvestingPro analysis suggests the stock is currently undervalued, with strong financial health metrics supporting the positive outlook. Furthermore, when looking at a two-year stacked basis, the trends remained stable, which has led to a consistent U.S. traffic share for CarGurus.
The analysts observed that CarGurus is experiencing healthy growth in monthly active users (MAU) within the United States. This growth in MAU is a key metric for digital platforms like CarGurus, as it reflects the number of unique users engaging with the website over a certain period, which can be indicative of the company's market presence and user retention. The company's strong market position is reflected in its impressive 83.73% gross profit margin and healthy liquidity, with a current ratio of 4.2 indicating robust operational efficiency.
CarGurus, an online automotive marketplace with a market capitalization of $2.92 billion, facilitates the connection between buyers and sellers of new and used cars. The company's platform is designed to provide users with detailed listings, pricing information, and tools to help them make informed purchasing decisions. InvestingPro subscribers can access 10+ additional exclusive insights and a comprehensive Pro Research Report, which provides deep-dive analysis of CarGurus' financial health, valuation metrics, and growth prospects.
The stability in CarGurus' U.S. traffic share suggests that the company has been able to maintain its competitive position in the online automotive market, despite the fluctuations in web visits. This aspect of the company's performance is particularly notable given the dynamic nature of the digital marketplace and the competitive landscape of online car sales. The company's solid market position is further supported by its strong financial health score of "GOOD" from InvestingPro, with net income expected to grow this year.
In summary, JMP's analysis underscores a steady performance by CarGurus in terms of user engagement and market penetration in the United States. The reaffirmed $38.00 price target suggests that the analysts see potential for the stock to perform well in the market, based on the current and expected future health of the company's core metrics. With multiple positive indicators and an undervalued status according to Fair Value analysis, CarGurus presents an interesting opportunity for investors seeking exposure to the digital automotive marketplace sector.
In other recent news, CarGurus Inc. has reported its fourth-quarter 2024 earnings, revealing a mixed performance. The company's EBITDA met guidance, although it did not surpass it as in previous quarters, and the U.S. Quarterly Average Revenue per Selling Dealer slightly missed estimates. Marketplace revenue was reported at $210 million, which was slightly below the analyst estimate of $211 million but within the company's guidance range. Analysts from BTIG and Citi have adjusted their price targets for CarGurus, with BTIG lowering it to $40 and Citi reducing it to $40 from $43, both maintaining their respective ratings. Meanwhile, JPMorgan has downgraded CarGurus from Overweight to Neutral, setting a price target of $34, citing challenges in the automotive marketplace and strategic shifts. Additionally, CarGurus announced that its CFO, Elisa Palazzo, will step down in March 2025, with CEO Jason Trevisan taking on dual roles until a new CFO is appointed. Despite challenges in certain segments, CarGurus continues to expand its product offerings and enhance its digital platform, aiming for growth in dealer partnerships and product adoption. The company has projected first-quarter 2025 revenue between $216 and $236 million, which is below the consensus estimate, indicating potential headwinds.
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