While used car sales giant Carvana (CVNA) has had kind of an up-and-down history of late, there are some signs that there may be a route back up coming up in the near term. That is what analysts from Piper Sandler had to say, and investors took this notion seriously. Dead seriously. Sufficiently so, in fact, that Carvana shares blasted up nearly 8% in Thursday afternoon’s trading.
The word from Piper Sandler’s Alexander Potter, who has a five-star rank on TipRanks, is that the recent slide is a buy-in opportunity. That was enough for Potter to bump the rating up from Neutral to Overweight, and set out a price target of $225 per share, which represented at 27.8% rise against the closing price from Wednesday.
The biggest reason? Carvana is, Potter noted, extremely well-insulated against President Trump’s tariffs. In fact, Potter said, there is no stock that he covers that is so well-insulated. Indeed, as a seller of used cars, there is virtually no risk that anything it handles will fall under a tariff. Moreover, after Carvana spent a brief time “flirting” with bankruptcy, as he noted, that represents a likely position from which to grow.
Not Everyone Is So Sure
Of course, it is worth noting that, just over two months ago, Hindenburg Research took aim at Carvana, declaring its then-recent turnaround a “mirage,” and one that was largely only held up by a delicate combination of loans and accounting chicanery. Referring to it as a “…father-son accounting grift for the ages,” that should have poisoned the well. But based on Potter’s results, not everyone is so certain in either direction.
There was a concern that Amazon (AMZN) might severely undercut Carvana’s business by stepping into the used-car field itself. But with reports alternately calling Amazon’s plan old news, and lacking the features that Carvana offers like delivery services or reconditioning, the impact of an Amazon entrance into the used car market is likely little threat to Carvana.
Is Carvana Stock a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CVNA stock based on eight Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 115.68% rally in its share price over the past year, the average CVNA price target of $288.85 per share implies 52.78% upside potential.
Questions or Comments about the article? Write to editor@tipranks.com