Evercore ISI has maintained its In-Line rating and a $178.00 price target on Carvana Co (NYSE: NYSE:CVNA).
The decision follows recent industry developments, including CarMax (NYSE:KMX)'s earnings release, which indicated a broad weakening of credit trends and a decline in consumer confidence in September.
These factors, coupled with the upcoming election, have prompted a reassessment of the risk-reward balance for Carvana's stock.
The analyst from Evercore ISI noted that although Carvana's credit might be more resilient than that of CarMax, the company's retail used unit comps are expected to grow in line with the market's expectation of over 30% for the third and fourth quarters, the stock's recent appreciation of approximately 20% since the initiation of the positive Tactical Analysis Point (TAP) call warrants caution. The industry is facing widespread concerns, as evidenced by Ally Financial (NYSE:ALLY) experiencing deteriorating credit trends and CarMax reporting higher loan losses.
In other recent news, Carvana continues to make headlines with a series of financial reviews and projections. BNP Paribas (OTC:BNPQY) Exane maintained a neutral stance on Carvana's shares, highlighting the company's significant relationship with Ally Financial.
BofA Securities reinstated coverage on Carvana with a Buy rating, citing potential for long-term growth in the expansive used car market. Evercore ISI increased its price target for Carvana, attributing this to tightened lending practices and increased web traffic.
Stephens initiated coverage on Carvana with an Overweight rating, projecting EBITDA profitability for the company by the end of the year. Jefferies raised its price target for Carvana, citing strategic capacity expansion.
In addition, Carvana's management provided guidance for third-quarter unit sales to exceed the second quarter's performance, indicating a year-over-year growth rate of over 25%. The company's projections for 2024 EBITDA range between $1 billion and $1.2 billion, surpassing the consensus estimate of $890 million.
InvestingPro Insights
According to the latest data from InvestingPro, Carvana Co (NYSE:CVNA) boasts a market capitalization of $36.05 billion, reflecting the scale of its operation in the online used car market. Despite some industry headwinds, Carvana's stock has shown remarkable strength with a year-to-date price total return of 220.46% and a 329.17% return over the past year, signaling strong investor confidence in the company's business model and growth trajectory.
InvestingPro Tips suggest that Carvana is currently trading at a low P/E ratio relative to near-term earnings growth, which could indicate that the stock is undervalued given its growth potential. Additionally, the fact that analysts have revised their earnings upwards for the upcoming period provides a positive outlook for the company's financial performance. This aligns with the Evercore ISI's note on Carvana's potential to increase market share and improve profitability in the long term. For investors seeking more in-depth analysis, InvestingPro offers a total of 18 additional tips on Carvana, available at https://www.investing.com/pro/CVNA.
Furthermore, with a PEG Ratio of 0.25 for the last twelve months as of Q2 2024, Carvana seems to be positioned for growth at a reasonable price when factoring in its earnings growth rate. This metric, combined with a robust 34.0% price total return over the last three months, showcases Carvana's recent market performance and may appeal to growth-oriented investors.
The InvestingPro Fair Value estimate of $177.25 also suggests that the current stock price is in line with the company's intrinsic value, providing a reference point for investors as they consider Evercore ISI's price target of $178.00. With Carvana trading near its 52-week high and analysts predicting profitability this year, the company appears to be on a solid footing despite the broader concerns facing the auto industry.
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