Carvana Stock Price Recovery Driven by Analyst Upgrades

A single analyst’s upgrade can excite a market; a trend of upgrades can lift it, which is lifting Carvana NYSE: CVNA—a trend in upgrades signaling a shift in sentiment and a sustainable rally for this stock. The upgrade trend is strong enough to put CVNA on MarketBeat’s list of Most Upgraded Stocks, which is significant because Carvana has been prominent on the list of Lowest Rated Stocks for many quarters. The takeaway is that this once stalled investment is rebounding, and the rebound is shifting into high gear. 

Carvana Co. stock logo

+3.80 (+3.02%)

(As of 11:56 AM ET)

52-Week Range


P/E Ratio

Price Target

The latest revision comes from Needham. Senior Analyst Chris Pierce and team upgraded the stock to Buy from Hold, calling it a secular growth story with a cyclical kicker. The secular growth story involves the company’s digital-first operating model, under-utilized brick-and-mortar footprint, and an outlook for industry-leading growth. The growth will be driven by unit sales and increased market share in the retail and wholesale markets. The cyclical recovery kicker involves the analysts’ sentiment. Needham views sentiment as bottoming and entering an upgrade cycle that could last several quarters. Needham’s new $160 is the new high target from analysts and may be reached soon. 

Institutional Tailwinds Lift Carvana to Two-Year High

Analysts are not the only sell-siders interested in Carvana. The institutions, the largest group of investors in the market, have bought this stock on balance for six consecutive quarters and increased their holdings to over 55%. The Q2 action is noteworthy because of numerous large position increases, including a 40% gain for T. Rowe Price, which now owns 3.7% of the shares. 

Vanguard holds about 5% of the stock in its funds and increased its holdings by 3%. The more significant activity is from the numerous smaller funds and private institutions that increased their holdings by triple digits. Those include the State Board of Administration of Florida Retirement System (+302%), Cetera Investment Advisors (+170%), and GAMMA Investing LLC (+127%). 

Overall MarketRank™
2.60 out of 5

Analyst Rating

27.5% Downside

Short Interest

Dividend Strength


News Sentiment
0.25mentions of Carvana in the last 14 days

Insider Trading
Selling Shares

Projected Earnings Growth

See Full Details

The reason for the bullishness is the results. The company hit the skids in 2021 but bottomed in 2022 on an expectation that an industry cycle low had been reached. This year’s catalyst was the Q1 results, which affirmed the outlook and gave a little more. The FQ1 results included top and bottom line strength, a return to growth, and record net income. Revenue growth topped 17%, outpacing consensus by 1200 bps on strength in units and pricing. 

The earnings were another real shocker, reversing a loss posted in the prior year and outpacing the consensus reported by MarketBeat by nearly $1.00. However, the guidance has the market shifting into high gear. The company didn’t give specific guidance but is forecasting a sequential acceleration in the YOY growth pace and for earnings strength to continue. 

Expectations Build for Carvana: Q2 Results Will be a Catalyst

The analysts are building solid expectations for Carvana’s Q2 results but may still underestimate the recovery. The ten revisions tracked by MarketBeat are all upward, but expect only 10% revenue growth at the consensus. Further, the consensus forecasts a quarter of GAAP and adjusted losses contrary to guidance. Q2 results are due at the end of July.

Short interest is another factor aiding the rally in this stock. Although short interest is falling, it was still a high 10% in mid-June, fueling a short-covering rally. 

The technical picture for this automotive stock is robust. It is moving up off its bottom and regularly knocking out resistance levels. The latest analysts’ upgrades have the market trading at a two-year high, supported by the 30-day moving average. With this trend in place, the stock will likely continue to move higher in 2024. The next target for significant resistance is near $150, which may be reached by mid-summer, assuming the Q2 results are good. 

Carvana CVNA stock chart

Before you consider Carvana, you’ll want to hear this.

MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Carvana wasn’t on the list.

While Carvana currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

7 AI Stocks to Invest In: An Introduction to AI Investing For Self-Directed Investors Cover

As the AI market heats up, investors who have a vision for artificial intelligence have the potential to see real returns. Learn about the industry as a whole as well as seven companies that are getting work done with the power of AI.

Get This Free Report

Like this article? Share it with a colleague.

Link copied to clipboard.

Source link

Content Disclaimer and Copyright Notice
Content Disclaimer

The content provided on this website is sourced from various RSS feeds and other publicly available sources. We strive to ensure the accuracy and reliability of the information, and we always provide source links to the original content. However, we are not responsible for the content’s accuracy or any changes made to the original sources after the information is aggregated on our site.

Fair Use and Copyright Notice

This website may contain copyrighted material, the use of which has not always been specifically authorized by the copyright owner. We believe this constitutes a “fair use” of any such copyrighted material as provided for in section 107 of the US Copyright Law.

In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.

Leave a Reply

Your email address will not be published. Required fields are marked *