Carvana Stock: Why One Analyst Sees Even More Upside After Earnings
Carvana stock is surging Thursday after the used car retailer's third-quarter earnings beat, but one analyst thinks there's even more room to run.
Carvana (CVNA) stock soared out of the gate Thursday after the used car retailer beat top- and bottom-line expectations for its third quarter and gave an encouraging fourth-quarter forecast.
In the three months ended September 30, Carvana's revenue increased 32% year over year to $3.7 billion, driven by a 34% jump in retail units sold to 108,651. The company also said its gross profit per unit rose 20.2% to $7,685.
Meanwhile, its earnings per share (EPS) fell 82.2% from the year-ago period to 64 cents. The sharp drop in earnings compared to the year prior is a result of its Q3 2023 profit getting a boost from "a gain on debt reduction."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The third quarter was another exceptional quarter for Carvana. We had record performance in virtually every key financial measure," said Carvana CEO Ernie Garcia in a statement. "Most importantly, our customer experiences, our financial performance, and our pace of growth continue to separate us further from the pack in our industry. Today, we are the most profitable and fastest-growing automotive retailer and there is still much more to do."
The results handily beat analysts' expectations. Wall Street was anticipating revenue of $3.45 billion and earnings of 25 cents per share, according to CNBC.
For the fourth quarter, Carvana said it expects to achieve a sequential increase in its year-over-year growth rate in retail units sold. For the full year, it expects to achieve adjusted EBITDA "significantly above" the high end of its previously forecasted range of $1 billion to $1.2 billion for the full year. EBITDA is short for earnings before interest, taxes, depreciation and amortization.
"Our results through Q3 position us well for a strong finish to 2024," Carvana said.
Is Carvana a buy, sell or hold?
Even though Carvana has more than quadrupled for the year to date, most of Wall Street is on the sidelines when it comes to the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for CVNA is $220.35, representing a discount to current levels. Additionally, the consensus recommendation is Hold.
But there are bulls to be found. Financial services firm Needham, for one, has a Buy rating on the large-cap stock and raised its price target to $300 from $200 after earnings.
"CVNA is leading the onslaught against traditional car retailing in the U.S. by leveraging a digitally native, data-centric, capital-efficient, verticalized approach that we believe is a more compelling buying experience and should lead to significant value creation over the next several years," says Needham analyst Chris Pierce.
The analyst adds that Carvana's differentiated offering positions it "as a winner over a longer term time horizon," with the stock poised to "show durable share gains given a better consumer offering and industry fragmentation."
Related Content
-
How to Avoid the Financial Quicksand of Early Retirement LossesSequence of returns — experiencing losses early on — can quickly deplete your savings, highlighting the need for strategies that prioritize income stability.
-
How an Elder Law Attorney Can Help Protect Your Aging ParentsIf you are worried about older family members or friends whose financial judgment is raising red flags, help is out there — from an elder law attorney.
-
Q4 Post-Mortem From an Investment Adviser: Year of ResilienceFinancial pro Prem Patel shares his take on how markets performed in the fourth quarter of 2025, with an eye toward what investors should keep in mind for 2026.
-
This Is How Early Retirement Losses Can Dump You Into Financial Quicksand (Plus, Tips to Stay on Solid Ground)
Sequence of returns — experiencing losses early on — can quickly deplete your savings, highlighting the need for strategies that prioritize income stability.
-
How an Elder Law Attorney Can Help Protect Your Aging Parents From Financial Mistakes
If you are worried about older family members or friends whose financial judgment is raising red flags, help is out there — from an elder law attorney.
-
Q4 2025 Post-Mortem From an Investment Adviser: A Year of Resilience as Gold Shines and the U.S. Dollar Dives
Financial pro Prem Patel shares his take on how markets performed in the fourth quarter of 2025, with an eye toward what investors should keep in mind for 2026.
-
'Donroe Doctrine' Pumps Dow 594 Points: Stock Market TodayThe S&P 500 rallied but failed to turn the "Santa Claus Rally" indicator positive for 2026.
-
Is Your Emergency Fund Running Low? Here's How to Bulk It Back UpIf you're struggling right now, you're not alone. Here's how you can identify financial issues, implement a budget and prioritize rebuilding your emergency fund.
-
An Expert Guide to How All-Assets Planning Offers a Better RetirementAn "all-asset" strategy would integrate housing wealth and annuities with traditional investments to generate more income and liquid savings for retirees.
-
7 Tax Blunders to Avoid in Your First Year of Retirement, From a Seasoned Financial PlannerA business-as-usual approach to taxes in the first year of retirement can lead to silly trip-ups that erode your nest egg. Here are seven common goofs to avoid.
-
How to Plan for Social Security in 2026's Changing Landscape, From a Financial ProfessionalNot understanding how the upcoming changes in 2026 might affect you could put your financial security in retirement at risk. This is what you need to know.
