Cars.com Will Continue Its Growth Streak In 2023, Says Analyst

Barrington Research analyst Gary Prestopino reiterated an Outperform rating on the shares of Cars.com Inc CARS with a target price of $25.00.
The analyst believes that the company is poised for consistent growth for the remainder of 2022 and all of 2023, having completed its transformation from a listing service to a technology-driven automotive marketplace solutions provider through its digital solutions product suite.
Cars.com's growth strategy is being driven by connecting buyers and sellers of vehicles through a range of digital solutions across a common technology platform that simplifies vehicle purchase activity, added Prestopino.
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Driven by new dealers, increased dealer retention, and digital solutions, dealer-generated subscription-based revenues have increased for eight consecutive quarters from $124 million in Q3 FY20 to $143 million in Q2 FY22.
The company's end-to-end digital solutions are driving growth in revenue despite a challenging environment for new and used vehicle sales stemming from supply constraints.
Prestopino also noted that Cars.com has a significant dealer and advertising TAM for growth.
The analyst specified that the company's financial results and long-term outlook continue to improve, but it is not reflected in the stock's valuation.
Price Action: CARS shares are trading higher by 1.03% at $11.77 on the last check Wednesday.