Evercore ISI Raises Carvana (CVNA) Price Target to $190
Bullish Outlook on Used Car Marketplace
Investment firm Evercore ISI has upgraded its price target for Carvana, an online used car retailer, to $190 per share, citing the company's strong growth prospects and dominant market position.
Analyst Chris McNally noted that Carvana's unique business model, which allows customers to purchase and finance vehicles entirely online, has given it a significant competitive advantage. The company's ability to offer a wide selection of vehicles, competitive pricing, and convenient delivery options has resonated with consumers.
Strong Financial Performance
McNally highlighted Carvana's impressive financial performance, with revenue growing over 90% in 2021. The company's gross profit margin has also been expanding, driven by scale and efficiency improvements.
Carvana's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected to turn positive in the second half of 2023, indicating the company's path to profitability.
Market Dominance
Evercore ISI believes Carvana is well-positioned to maintain its market dominance in the online used car segment. The company's extensive network of inspection and reconditioning centers provides it with a significant supply chain advantage.
Additionally, Carvana's investment in technology, including its proprietary vehicle pricing and matching algorithms, has helped it differentiate itself from competitors.
Positive Industry Trends
The analyst also pointed to favorable industry trends supporting Carvana's growth. The shift towards online car purchasing is expected to continue, particularly among younger generations.
The increasing adoption of electric vehicles is also seen as a positive for Carvana, as it has positioned itself as a leader in the online sale of used EVs.
Conclusion
Evercore ISI's increased price target underscores its bullish outlook on Carvana. The company's strong financial performance, market dominance, and favorable industry tailwinds position it for continued growth and value creation for shareholders.
