This Carvana Analyst Believes There Is Near-Term Upside Amid Auto Workers Strike

Carvana Co CVNA shares were trading higher last week amid the United Auto Workers strike.

The debt exchange deal announced in August and improving profitability could lend upside to Carvana’s performance in the third and fourth quarters of 2023, while giving the company “at least two years of breathing room to execute,” according to Wedbush.

The Carvana Analyst: Seth Basham upgraded the rating for Carvana from Underperform to Neutral, while raising the price target from $40 to $48.

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The Carvana Thesis: Near-term upside may be driven by more favorable industry pricing conditions and loan sales that are tracking to exceed originations, Basham said in the upgrade note.

“At the same time, CVNA has made significant progress on operational initiatives that should contribute to sustainably higher retail gross profit per unit (GPU) levels,” the analyst wrote.

“That said, the company’s view of sustainable retail GPU improvement of $600-$1,100 vs. 2021 appears high to us, particularly when the company pivots to growth."

CVNA Price Action: Shares of Carvana had risen by 1.34% to $52.90 at the time of publication Monday.

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