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On Thursday, Piper Sandler displayed confidence in Carvana Co (NYSE:CVNA) by increasing the firm’s price target on the shares to $315 from the previous $230, while keeping an Overweight rating on the stock. The adjustment came as a response to Carvana’s recent quarterly performance, which was described as impressive by the analysts. The company’s strong momentum is reflected in its 26.94% revenue growth over the last twelve months, though it currently trades at relatively high valuation multiples.
The company’s stock rose by 3% in after-hours trading following the announcement, adding to its impressive 126.51% return over the past year. Piper Sandler’s analysts expressed comfort in recommending additional investment in Carvana, citing significant revisions to their estimates. The new price target is based on a discounted cash flow (DCF) analysis. According to InvestingPro, four analysts have recently revised their earnings estimates upward for the upcoming period.
The analysts highlighted Carvana’s ability to maintain fundamental momentum in a market rife with uncertainty. They noted that Carvana stands out within their coverage area due to its high-visibility growth and operating leverage. This combination, according to Piper Sandler, is unmatched by any other stock they cover, making Carvana a notable player in the current market environment.
Carvana’s recent quarterly results have evidently strengthened the company’s position in the eyes of investors and analysts alike, as reflected in the revised price target. Piper Sandler’s comments underscore a belief in the ongoing growth and performance potential of Carvana, even as they acknowledge the possibility that the valuation could be seen as stretched by some market participants.
In other recent news, Carvana Co. reported strong financial results for the first quarter of 2025, surpassing both earnings and revenue expectations. The company achieved a revenue of $4.232 billion, exceeding forecasts by $322 million, and recorded an adjusted EBITDA of $488 million, more than doubling from the previous year. Carvana’s retail unit sales increased by 46% year-over-year, underscoring its ability to capture market share in the automotive retail sector. Analysts at Needham, Citi, BTIG, and Evercore ISI have responded positively to these results, with Needham maintaining a $340 price target, Citi raising its target to $325, BTIG lifting its target to $330, and Evercore ISI increasing its target to $280. These firms have reiterated their confidence in Carvana’s growth potential, citing the company’s market share gains and robust demand trends.
Carvana’s management has set ambitious long-term goals, aiming to reach 3 million annual retail sales within the next 5 to 10 years, which would account for approximately 5% of the total addressable market. To achieve these objectives, Carvana plans to expand its infrastructure, including Inspection and Reconditioning Centers and Megasites, and accelerate production capabilities. The company’s operational efficiency has also improved, with selling, general, and administrative expenses per unit approximately $1,000 lower year-over-year. Despite potential risks such as tariffs, subprime credit quality, and economic downturns, analysts express confidence in Carvana’s ability to navigate these challenges.
Furthermore, Carvana’s management provided guidance for sequential increases in both units sold and adjusted EBITDA, introducing a new long-term target of 3 million units sold within a 5-10 year range at an adjusted EBITDA margin of 13.5%. With the first quarter of 2025’s EBITDA margin already at 11.5%, the target margin seems attainable. Analysts have noted Carvana’s strong execution and market share gains as key drivers for their positive outlook, reflecting confidence in the company’s potential for further growth in the competitive auto retail market.
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