Update shared on 12 Nov 2025
Fair value Increased 0.42%Analysts have slightly raised their price target for CarGurus from $39.75 to $39.92. They cite stronger expected profit margins and revenue growth, with confidence bolstered by recent research suggesting limited near-term competitive threats.
Analyst Commentary
Recent analyst perspectives on CarGurus reflect a nuanced view of the company's position in the evolving online automotive marketplace. The following summarizes key takeaways from their commentary regarding current valuation, execution, and growth prospects.
Bullish Takeaways
- Bullish analysts highlight that new entrants, such as Amazon Autos, are currently not exerting significant competitive pressure on CarGurus. This supports continued growth in the near term.
- The company is seen benefiting from healthy profit margins and stable revenue growth, which underpins the modest upward adjustment in price targets.
- Dealers participating in newly launched competing marketplaces, including Amazon, are reportedly experiencing light transaction volume. This suggests limited immediate disruption to CarGurus' business model.
- Analysts note that competitors are struggling with inconsistent customer experiences and lack of broad dealer engagement. These are advantages that may sustain CarGurus' market position and valuation momentum.
Bearish Takeaways
- Bearish analysts caution that while current competitive threats appear limited, the rapidly changing nature of the digital auto retail sector could introduce new risks over time.
- Concerns persist about execution, especially if larger firms like Amazon dedicate more resources to supporting and training dealers. This could potentially improve their platforms' appeal.
- Skepticism remains about the sustainability of recent margin improvements if the competitive landscape intensifies or if new rivals adjust their strategies successfully.
What's in the News
- Completed repurchase of 9,164,088 shares, equivalent to 8.97% of total shares, for $295.23 million as part of ongoing share buyback efforts (Key Developments)
- Repurchased 3,233,649 shares for $110.69 million between July and September 2025, representing 3.27% of the company (Key Developments)
- Issued earnings guidance for the fourth quarter and full-year 2025, projecting Marketplace revenue of $236 million to $241 million for the quarter and $902 million to $907 million for the year (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has risen slightly from $39.75 to $39.92, reflecting more optimistic expectations for the stock's fair value.
- Discount Rate has increased moderately from 8.00% to 8.39%, suggesting a slightly higher risk assumption in valuation models.
- Revenue Growth outlook has improved, moving from 5.90% to 6.56% as analysts anticipate stronger top-line performance.
- Net Profit Margin is projected higher, up from 27.22% to 28.34%, indicating enhanced profitability expectations.
- Future P/E has fallen significantly from 14.66x to 12.16x. This change implies analysts expect improved earnings relative to price.
Disclaimer
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