Carvana Co (NYSE:CVNA) shares are moving higher on Monday after Wedbush upgraded the stock and lifted its price target.
- CVNA stock is showing exceptional strength. See the market dynamics here.
What Happened: Wedbush analyst Scott Devitt boosted Carvana’s rating to Outperform from Neutral and bumped the price target from $380 to $400.
The upgrade comes after a recent 13% decline in shares, which the analyst firm feels is excessive considering management’s excellent performance history. The current price of shares is close to the lower end of the company’s historical multiple range over the previous two years. Webush said the stock is trading around 22 times its 2027 earnings per share estimates.
Per current estimates, Carvana will surpass CarMax Inc‘s (NYSE:KMX) quarterly used unit volumes six months ahead of schedule, Devitt said, noting that momentum has shifted in favor of Carvana in recent weeks. In particular, according to Street estimates, Carvana will deliver about 187,000 used units in the fourth-quarter of 2026, surpassing about 170,000 for CarMax.
According to the analyst's base case, Carvana is on track to reach three million in annual unit retail sales by 2033, delivering a unit sales compound annual growth rate of 23% or greater through 2033.
Devitt stated that Carvana has steadily grown its margins year-over-year, thanks to stronger gross profit per unit and tighter cost controls. Wedbush expects adjusted EBITDA margins to climb toward 12% by 2027, showing a clear path toward management's longer‑term goal of 13.5% within the next five to ten years.
Despite its expansion into lower-prime and sub-prime financing, the firm sees little reason to be concerned about Carvana’s credit performance, acknowledging that investor sentiment has been linked to broader market concerns and underperformance from peer CarMax.
With adjusted EBITDA of $535 million at a 10.3% margin, Wedbush now anticipates fourth-quarter revenue of $5.2 billion, up 46.4% year-over-year. The company is aiming for $19.9 billion in revenue this year, a 45.6% jump from last year, driven by a strong 41.4% rise in used unit sales.
“Management has delivered robust growth for several quarters, and in the near-term, we see upside to current estimates,” Devitt said.
CVNA Price Action: Carvana shares were up 5.91% at $328.20 at the time of publication on Monday, according to Benzinga Pro.
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