Needham analyst Chris Pierce reiterated his Buy rating on CarGurus, Inc (NASDAQ:CARG) but cut the price target to $16 from $21 post 3Q22 results that broadly missed consensus and 4Q22 guidance that fell materially short of forecasts. 

CARG stock has lost 63% year-to-date. Other industry players, notably used car retailer Carvana (NYSE:CVNA), have seen large share price declines (96%) in a testament to the difficulty seen in the industry.

Read: After A 97% Fall, Could Carvana Shares Be Heading To 10 Cents? Here's Why One Analyst Thinks So

Pierce said the tailwind of positive earnings revisions post the CarOffer integration is aggressively reversing. CARG's marketplace subscription business (dealer lead gen) is adding add-back dealers, and revenue per dealer is trending in the right direction, though at a slower pace sequentially. 

However, CarOffer's earnings and growth tailwinds have reversed to stiff headwinds, given falling vehicle prices and increased dealer arbitration levels. 

CARG is moving to put stricter controls in place, although a turnaround (in margins) is not likely until '23. 

Related: Used Car Prices Down 15% Over 9 Months, Sign Of Inflation Coming Down?

RBC Capital analyst Brad Erickson maintained CarGurus with an Outperform and cut the price target from $35 to $19. As previewed, CARG put up a miss & lower Q3 driven by a CarOffer, but the magnitude of the Q4 guide down was particularly disappointing. 

CarOffer is broken for now and will need significant fixing to return to growth & profitability in a choppy environment. 

That said, even with the CarOffer bull case clearly off the table, he estimates the stock is meeting expectations and significantly outperforming the incredibly challenged used car market. 

Raymond James analyst Aaron Kessler maintained CarGurus with an Outperform and cut the price target from $20 to $16. CARG reported softer 3Q results and 4Q outlook, given weakening auto industry trends and operational issues with its CarOffer and IMCO businesses. 

These pressures will likely persist into 4Q, and EBITDA pressures will exacerbate as CARG works through inventory and arbitration headwinds. 

Positively, the core Marketplace business remains resilient with solid EBITDA performance. 

Price Action: CARG shares traded lower by 6.07% at $12.93 on the last check Wednesday.

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