Carvana's Q4 Earnings Impress Analysts, Shares Surge On Strong Profit Outlook

Shares of Carvana Co CVNA were climbing in early trading on Friday, after the company reported its fourth-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

RBC Capital Markets On Carvana

Analyst Brad Erickson maintained an Underweight rating, while raising the price target from $24 to $45.

Carvana reported “mixed” results for the quarter, Erickson said. “Units, revenue and EBITDA missed and while we believe management guided FY24 units below Street, the much stronger EBITDA outlook trumped all of it and is driving the squeeze,” he wrote.

“Positively, the company continues to show outsized GPU (gross profit per unit) improvement and is giving bulls hope of being on the doorstep of a bigger return to volume growth,” the analyst further stated.

Wedbush On Carvana

Analyst Seth Basham reaffirmed a Neutral rating, while lifting the price target from $50 to $60.

Carvana reported its fourth-quarter results “mostly in line with expectations on the top- and bottom-lines, but issued 1Q24 EBITDA guidance well ahead of consensus,” Basham wrote in a note.

“Results for 4Q were highlighted by record retail non-GAAP gross profit per unit (GPU) of $2,970 (vs. our $2,272 and consensus $2,362), boosted by continued progress in operational efficiencies, customer sourcing, inventory turn times, and revenues from delivery fees,” he added.

Check out other analyst stock ratings.

JMP Securities On Carvana

Analyst Nicholas Jones reiterated a Market Outperform rating and price target of $80.

Carvana’s generated “solid” profitability, although revenues came in softer than expected, Jones said. “The company continues to benefit from strong execution and improving unit economics, and guided 1Q24 adj. EBITDA to be significantly above $100M, with no meaningful one-time benefits to call out, above consensus of $70M,” the analyst wrote.

“We continue to see CVNA as well positioned to return to growth and drive additional margin expansion given the current underutilization of its capacity, industry-leading offering, and national footprint covering over 80% of the U.S. population,” he added.

Needham On Carvana

Analyst Chris Pierce reiterated a Hold rating on the stock.

“We were bullish into the event and lean more bullishly post commentary on the set-up for profitable growth,” Pierce wrote.

“CVNA 2.0 looks even better positioned to drive growth (more reconditioning capacity, same day delivery driving higher conversion, less digital competition) with fixed costs leverage still on the come,” he added.

William Blair On Carvana

Analyst Sharon Zackfia reaffirmed an Outperform rating on the stock.

“Carvana posted a healthy fourth quarter with profits exceeding our/consensus expectations despite selling about $200 million less in loans than originated given the timing of loan sales in the quarter,” Zackfia said in a note.

“We believe Carvana is now poised for a further breakout as we expect growth in retail units sold to accelerate in coming quarters while generating materially greater profits than expected,” he added.

CVNA Price Action: Shares of Carvana had risen by 31% to $68.74 at the time of publication Friday.

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