CarGurus Accelerates Towards Sustainable Profitability, Analyst Cheers On with Higher Price Target - CarGurus (NASDAQ:CARG)

Oppenheimer analyst Jed Kelly reiterated an Outperform rating on the shares of CarGurus, Inc. CARG, raising the price target to $24 from $21.
CarGurus recently reported its first quarter of FY23 results, where adjusted earnings of $0.260 beat estimates of $0.170. For 2Q, CarGurus expects revenues of $220 million to $240 million.
The analyst notes that despite the challenging environment, CarGurus guided revenue flat sequentially, reflecting continued pricing wins with high-value dealers and CarOffer operational discipline.
The analyst thinks the company's operational initiatives are trending toward sustainable profitability with higher subscriptions.
CarGurus is mainly set to grow because of its effective Renewal process that filters out lower-quality dealers, he adds.
The analyst also applauds the company's proprietary valuation technology, clean UX, and digital retail products to create sustainable traffic advantages and higher-intent shoppers.
The analyst notes that these upbeat technologies will position the company as a leading marketing platform for U.S. car dealers.
This apart, the company's push into wholesaling should be transformational, creating a more transactional platform generating multiple expansions.
Price Action: CARG shares are trading lower by 2.21% to $19.05 in the market session on Friday.