These Analysts Remain Carvana Bulls After Strong Q2


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Carvana Co (NYSE:CVNA) reported Wednesday second-quarter results, which prompted two analysts to reaffirm a bullish stance on the online platform for consumers to buy and sell used cars.

The Analyst

  • Bank of America's Nat Schindler maintains a Buy rating on Carvana with a price target lifted from $82 to $86.
  • Wells Fargo's Zachary Fadem maintains at Outperform with a $85 price target.

BofA: Growth Story Continues

Carvana showed multiple attractive growth metrics in its second-quarter report, including retail units growing 95% year-over-year to 44,000, Schindler wrote in a note. Wholesale unit growth accelerated from 186% year over year in 2018 to 194% while total gross profit per unit (ex-Gift) rose 46% from last year to $3,175 and beat the Street's estimate of $2,634.

In addition, gross margin improved 150 basis points from the first quarter to 14% and beat expectations of 12.6%, the analyst wrote. The expansion was broad-based but mostly attributable to superior execution and higher gains on its securitization and a favorable rate environment.

Encouragingly, the company's performance in the second quarter look to be sustainable and Carvana boasts a superior growth profile versus its peers with the largest market opportunity, the analyst wrote.

Wells Fargo: Six Bullish Takeaways

Beyond the main financial metrics there are six key takeaways which support the bullish case for Carvana's stock, Fadem wrote in a note. These include:

  • 66% of the U.S. population is now covered after expanding to 28 new markets and two vending machines in the second quarter;
  • Average days to sale improved from 66 last year to 61; and
  • 17% of retail units sold were sourced from customers versus 14% last quarter.

Price Action

Shares of Carvana were trading up 24.5% Thursday afternoon at $72.05.

Related Links:

RBC Raises CarMax Price Target, Says Headwinds Will Ease

Morgan Stanley, Wedbush Cautious On Carvana


27% profits every 20 days?

This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsBank of AmericacarsNat SchindlerUsed CarsWells FargoZachary Fadem