Carvana Co. (CVNA) Upgraded to Outperform by Wedbush

CVNA +4.81%

We recently published 12 Best Consumer Cyclical Stocks to Buy According to Analysts.  Carvana Co. (NYSE:CVNA) is one of the best consumer cyclical stocks

Carvana Co. (NYSE:CVNA) is one of the most well-known car retailers in the US. Its business model is fully online, and during the third quarter, the firm’s retail sales were 155.941 vehicles.

As of November 28th, out of the 24 analyst recommendations for Carvana Co. (NYSE:CVNA), seven were a Strong Buy, while 10 were Buy. Out of the remaining seven, six analysts had a Hold rating, while one had rated the stock at Underperform. The average share price target was $419.45.

One recent coverage for Carvana Co. (NYSE:CVNA) came from Wedbush on November 24th. It was striking as Wedbush upgraded the stock to Outperform and upgraded the share price target to $400 from an earlier $380. As part of the report, Wedbush outlined that it saw Carvana Co. (NYSE:CVNA)’s recent selloff as excessive. The firm also brought forward its estimate of the car retailer crossing CarMax in quarterly used-unit volumes. Wedbush now expects Carvana Co. (NYSE:CVNA) to cross CarMax in Q4 2026 earlier than the previous estimate that saw around mid-2027.

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Carvana Co. (NYSE:CVNA)’s shares have gained 79% year-to-date. The firm presented at the Wells Fargo TMT Summit on November 14th. It outlined that it was targeting to sell three million vehicles annually over the next five to 10 years. Carvana Co. (NYSE:CVNA)  had shared a similar estimate during its third-quarter earnings call. CEO Ernest Garcia remarked that “Q3 was another large step on the path to achieving our current goal of selling 3 million cars at a 13.5% adjusted EBITDA margin in the next 5 to 10 years.”

During the call, analysts also questioned Carvana Co. (NYSE:CVNA)’s management about the estimate. One question came from Needham’s Chris Pierece, who asked “how you came up with it, what drives it and what could pull it forward or push it back?”

In response, CEO Garcia remarked:

“Sure. I would say at a high level, the time lines we provided there were 5 to 10 years, which correspond to 2030 to 2035. And I think the fast end of that is approximately 40% compounded growth and the slow end of that is approximately 20% compounded growth. I think as a general matter, we view that as largely driven by our ability to continue to execute is probably the biggest determinant of that. There’s a lot of work that has to be done across the entire business to make sure that we’re buying cars, reconditioning cars, delivering cars to customer long leg and last mile, handling customer questions and just scaling the entirety of the business. So I think there’s a lot of work in there. And I think our execution is the primary driver that we think will dictate when we achieve that goal.”

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Disclosure: None. This article is originally published at Insider Monkey.