Why Carvana (CVNA) Is Up 11.6% After Bullish Analyst Calls On Its Online-First Model

• Recently, Carvana drew intensified attention after multiple Wall Street firms, including UBS and Wedbush, issued upbeat assessments emphasizing its online-first used car model, operational efficiency, and potential to overtake traditional dealers in unit volumes.
• These reports also highlighted management’s ambition to scale annual sales toward three million vehicles and target double-digit adjusted EBITDA margins, underscoring how bullish views hinge on Carvana’s ability to turn its digital platform into sustainably higher profitability.
• Against this backdrop, we’ll explore how the bullish analyst commentary around Carvana’s disruptive online model could reshape the company’s existing investment narrative.

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Carvana Investment Narrative Recap

To own Carvana, you have to believe its online-first model can keep taking share from traditional dealers while scaling profitably, without logistics or reconditioning costs eating into margins. The recent cluster of bullish analyst calls reinforces optimism around near term volume and margin improvement, but does not fundamentally change the key catalyst of execution on growth targets or the central risk that rapid expansion could strain operations and profitability.

The most relevant development is UBS initiating coverage with a US$450 price target and highlighting Carvana as a “true disruptor” with profitable unit economics and higher profit per car than peers. This aligns directly with the current catalyst, as investor confidence now hinges on whether Carvana can maintain those unit economics while ramping toward management’s multi million vehicle sales ambitions and absorbing the cost of ongoing ADESA site integrations and delivery expansion.

Yet, even as optimism builds, investors should also be aware of the risk that rapid ADESA integrations and expansion spending could...

Read the full narrative on Carvana (it's free!)

Carvana's narrative projects $33.2 billion revenue and $2.2 billion earnings by 2028.

Uncover how Carvana's forecasts yield a $419.45 fair value, a 5% upside to its current price.

Exploring Other Perspectives

Eighteen members of the Simply Wall St Community value Carvana between US$60 and US$500, reflecting very different expectations for its future. When you set those views against the recent bullish focus on Carvana’s ability to sustain high growth without operational or margin strain, it underlines why comparing several independent perspectives can be helpful.

Explore 18 other fair value estimates on Carvana - why the stock might be worth as much as 25% more than the current price!

Build Your Own Carvana Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Carvana research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Carvana research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Carvana's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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