Carvana Analyst Sees 'Remarkable Turnaround' Continuing

RBC Capital Markets upgraded Carvana Co CVNA to Outperform from Sector Perform on Tuesday, citing sustainable momentum in unit sales and profits after the online used-car retailer’s “remarkable turnaround” last year.

Shares climbed 6.5% in early trading to $201.27, building on Monday’s gains after the company announced it had amended an agreement to reestablish a $4 billion commitment for automotive finance receivables.

The Carvana Analyst: Analyst Brad Erickson upgraded the rating for Carvana from Sector Perform to Outperform, while raising the price target from $270 to $280.

The Carvana Thesis: The current Street estimates do not reflect the company's market share ramp, Erickson said in the upgrade note.

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"We raise our estimates ~4% ahead of Street for Q4 and ~2% for 2025, and could still wind up overly-conservative," he added.

There is room for further growth in GPU levels as "inventory pools expand to drive delivery/logistics efficiencies," the analyst stated.

"We believe retail marketplace can become a more meaningful contributor to unit growth over time as the company expands its commercial fleet partnerships," Erickson wrote. He further stated that the perception of Carvana having a weak balance sheet could abate over time "through a combination of paying down debt and re-financing."

CVNA Price Action: Shares of Carvana had risen by 7.28% to $202.59 at the time of publication on Tuesday.

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