Cars.com Cruises: Analyst Praises Strong Q1 Results And Organic Traffic Growth

Barrington Research reiterated an Outperform rating on the shares of Cars.com Inc CARS with a price target of $25.
The company’s Q1 results included revenue of $167.1 million and adjusted EBITDA of $44.3 million, beating the analyst consensus estimates.
Results for the quarter were in line with management’s guidance that called for a revenue range of $166-168 million with an adjusted EBITDA margin range of 25-27%, equating to an adjusted EBITDA range of $41.5-45.4 million.
The analyst said that financial results were a function of strength in the marketplace business, website growth, the addition of Accu-Trade, and media product upsells that all contributed to a 4% year-over-year increase in ARPD.
Due to strong organic traffic growth, Cars.com was able to spend less on marketing and sales than originally planned while allocating more resources to product development initiatives, added the analyst.
The analyst noted that during Q1/23, Cars.com introduced new marketplace subscription packages that combine tools and services that enable dealers to better leverage the company’s platform capabilities.
The analyst noted subscription pricing was aligned with the enhanced value of new packages and the overall reception has been positive within the dealer base.
Accu-Trade is also seeing strong engagement from dealers and consumers, with Vehicle appraisals increasing by 70% sequentially, with more than 600 dealers connected to Accu-Trade.
Price Action: CARS shares are trading higher by 2.56% at $18.59 on the last check Wednesday.

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