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Investing.com - Morgan Stanley maintained its Overweight rating on Carvana (NYSE:CVNA) with a price target of $450.00 on Monday. The online auto retailer, currently valued at $72.8 billion, has demonstrated strong performance with a 39.48% revenue growth over the last twelve months.
The firm noted that while investor concerns about the auto market "are not unfounded," prime auto performance has shown improvement, with third-quarter bank earnings revealing lower delinquencies and accelerating originations.
Loan-level data indicates subprime auto loans are displaying "incremental signs of stress" with elevated delinquencies and deteriorating macroeconomic data affecting low-income consumers, according to the research note.
Morgan Stanley pointed out that rising delinquencies have been a gradual trend since 2022, which has given auto issuers like Carvana time and flexibility to adjust parameters to maintain performance.
The firm forecasts a reversion to Carvana’s historical gain on sale to account for volatility, noting potential downside risk that could weigh on margins and the company’s ability to monetize future loans, though Carvana’s economic exposure to existing loan vintages remains "relatively limited."
In other recent news, Carvana has seen a series of notable developments. Moody’s upgraded Carvana’s credit rating to B2 from B3, highlighting the company’s improved operating performance and voluntary debt reduction. This upgrade was accompanied by a positive outlook, with enhancements in both senior secured and unsecured global notes ratings. Meanwhile, Jefferies has upgraded Carvana from Hold to Buy, raising the price target to $475, citing the company’s strong position to benefit from the digital shift in the used car market.
BTIG reiterated its Buy rating and maintained a $450 price target on Carvana, despite concerns over the company’s financing activities and credit exposure. JPMorgan also increased its price target to $425 while maintaining an Overweight rating, pointing to solid fundamentals and recent strong second-quarter results. Additionally, Citizens JMP reaffirmed its Market Outperform rating with a $460 price target, supported by favorable industry trends. These developments underscore a mix of optimism and caution among analysts regarding Carvana’s future prospects.
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