Market Overview

These Analysts Remain Carvana Bulls After Strong Q2

These Analysts Remain Carvana Bulls After Strong Q2

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

Latest Ratings for CVNA

Sep 2019Initiates Coverage OnNeutral
Sep 2019Initiates Coverage OnOutperform
Sep 2019Initiates Coverage OnBuy

View More Analyst Ratings for CVNA
View the Latest Analyst Ratings

Posted-In: Bank of America carsAnalyst Color Earnings News Price Target Reiteration Analyst Ratings


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