RBC Capital lifts Carvana stock price target to $340 from $320

On Thursday, RBC Capital Markets analyst Brad Erickson increased the price target on Carvana shares (NYSE:CVNA) to $340, up from $320, while maintaining an Outperform rating. With the stock currently trading at $287.34 and sporting a market capitalization of $62.14 billion, Erickson highlighted Carvana’s first-quarter performance as robust, particularly noting that retail units sold exceeded expectations, which could lead to higher future estimates. According to InvestingPro data, the company has shown impressive momentum with a 126.51% return over the past year.

Erickson praised Carvana for its ability to leverage both gross profit per unit (GPU) and fixed costs effectively, a strategy that could potentially give the company a long-term structural pricing advantage. The company’s revenue growth of 26.94% and gross profit margin of 21.03% support this observation. Moreover, he pointed out Carvana’s plans to significantly ramp up production and generate more cash, which may enable the company to reduce debt. InvestingPro analysis shows 15+ additional insights about Carvana’s financial health and growth potential.

The analyst’s outlook for Carvana is optimistic, suggesting that the company has the potential to transform from a former bankruptcy risk to a business capable of sustained cash flow growth in a market with expansive opportunities. Erickson’s revised estimates and price target reflect his confidence in Carvana’s growth trajectory.

In his commentary, Erickson acknowledged a minor miss in retail GPU but emphasized the bigger picture. He believes that Carvana possesses the necessary personnel, operations, infrastructure, and capital to grow its business substantially from its current state. According to Erickson, this potential for growth is still not fully recognized by the market.

In other recent news, Carvana Co. has reported impressive quarterly earnings and revenue results, drawing attention from several analyst firms. BTIG highlighted Carvana’s performance, noting the company sold 133.9K retail units, surpassing expectations and achieving a revenue of $4.2 billion with an Adjusted EBITDA of $488 million. Citi analysts also expressed confidence, raising their price target to $325 after observing a 46% year-over-year increase in retail unit sales for the first quarter. Needham maintained a $340 price target, emphasizing Carvana’s potential for market share gains and efficient overhead management.

Piper Sandler increased its price target to $315, citing Carvana’s high-visibility growth and operating leverage. Evercore ISI raised its target to $280, acknowledging Carvana’s significant share gain and profit ramp, although they noted potential risks such as tariffs and competition from new entrants like Amazon (NASDAQ:AMZN). Across the board, analyst firms such as BTIG, Citi, and Piper Sandler have maintained positive outlooks on Carvana, reflecting confidence in the company’s growth trajectory. Carvana’s management has set ambitious long-term goals, aiming for 3 million annual retail sales, which would represent about 5% of the total addressable market. The company’s recent performance and strategic plans have positioned it as a notable player in the competitive auto retail market.

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