Update shared on 29 Oct 2025
Fair value Increased 2.80%Analysts have modestly increased their fair value estimate for CarGurus to $39.75, citing stronger marketplace revenue growth and solid dealer expansion. This change comes despite mixed profit margins and the planned winding down of CarOffer.
Analyst Commentary
Analysts have recently shared a range of views on CarGurus, highlighting both areas of strength and points of concern following the company's second quarter results and strategy updates.
Bullish Takeaways
- Bullish analysts are encouraged by the ongoing expansion of CarGurus’s dealer network in the U.S., which supports a longer-term growth runway and enhances the company’s marketplace value.
- There is notable optimism around accelerating marketplace revenue, driven by rising dealer participation and greater adoption of premium service tiers.
- New initiatives in lead generation for new vehicles are seen as early but promising opportunities for additional monetization and differentiation within the platform.
- Some analysts have increased their EBITDA forecasts for CarGurus based on these execution improvements, leading to upward revisions in fair value estimates and price targets.
Bearish Takeaways
- Bearish analysts have lowered price targets to reflect CarGurus’s decision to wind down CarOffer, citing concerns over the impact to future transaction-driven revenue and potential pressure on terminal valuation multiples.
- The company’s mixed profit margins, particularly in light of recent volatility and the CarOffer exit, have prompted some caution regarding near-term financial performance.
- Uncertainty remains over whether the sunsetting of CarOffer will limit the company’s optionality and slow its progress in transactional product offerings compared to rivals.
- Cautious voices also point to the need for CarGurus to leverage its data and insights products more effectively to sustain its competitive advantage and maintain steady dealer count growth.
What's in the News
- CarGurus announced updated earnings guidance for the third quarter of 2025, projecting Marketplace revenue between $228 million and $233 million (Key Developments).
- On August 6, 2025, the Board decided to wind down CarOffer, including Dealer-to-Dealer and Instant Max Cash Offer products, following a strategic reassessment due to challenges in unpredictable pricing environments. The company expects between $14 million and $19 million in expenditures relating to the wind-down, mostly incurred in the second half of 2025 (Key Developments).
- As of August 7, 2025, CarGurus increased its equity buyback plan authorization by $150 million, bringing the total to $350 million (Key Developments).
- From April 1, 2025, to August 7, 2025, the company repurchased 11,004 shares for $0.33 million, marking the completion of 5,930,439 shares bought back since the plan's inception in November 2024 (Key Developments).
Valuation Changes
- The Fair Value Estimate has increased slightly from $38.67 to $39.75.
- The Discount Rate has decreased modestly from 8.14% to 8.00%.
- The Revenue Growth Forecast has risen from 5.74% to 5.90%.
- The Net Profit Margin has declined from 29.16% to 27.22%.
- The Future P/E Ratio has increased from 13.42x to 14.66x.
Disclaimer
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