Carvana’s Price Target Increased by Analyst

by Warren Seah

JMP Securities analyst Nicholas Jones has shown increased confidence in Carvana Co. (CVNA) by doubling his price target on the company’s shares to $50. In a note to clients, he attributes this revision entirely to multiple expansion. Jones believes that there is significant upside potential for CVNA’s multiple as it moves towards profitability, especially compared to its pre-pandemic average.

One key benefit of a rising stock price, according to Jones, is the increased ease with which Carvana can raise capital without resorting to dilutive measures. This reduced risk of bankruptcy further strengthens the company’s position and should drive the share price higher.

Carvana has also provided an optimistic outlook in early June, setting expectations for the upcoming quarter. As the company makes progress towards sustainable positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and significant positive unit economics, investor focus will likely shift towards the anticipated return to growth. This shift in focus could act as a material catalyst for Carvana’s share price.

Jones rates Carvana’s stock as market outperform, indicating his belief in its future success.

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