Online auto retailer Carvana was handed an upgrade and several price target increases following a sharp swing to profitability and a sales beat for the first quarter late Wednesday. Carvana stock bolted more than 30% higher Thursday.
JPMorgan upgraded Carvana stock to overweight, up from neutral, and hiked its price target to 130, from its previous 70, following the Q1 beat. The firm wrote that Carvana's "rapid progress" on margin expansion and overall EBITDA, combined with existing cash on the balance sheet, "should put to rest any lingering concerns around optionality to reduce debt/interest burden over time."
Meanwhile, Baird analyst Colin Sebastian on Thursday raised the firm's price target on Carvana stock to 110 from 65. Sebastian maintained a neutral rating on the shares, writing that he expects CVNA to trade significantly higher off strong Q1 results and guidance.
Wells Fargo analyst Zachary Fadem on Thursday also increased his price target on Carvana stock to 77 from the previous 60, with an equal weight rating.
Carvana Stock: Q1 Earnings
Carvana late Wednesday reported net income of $49 million, up from a year-ago loss of $286 million. Adjusted earnings before interest, taxes, depreciation and amortization were #235 million, vs. a $24 million loss in Q1 223.
First-quarter revenue clocked in at $3.06 billion, up more than 17%. Analysts had projected $2.67 billion.
The Tempe, AZ.-based company said it sold 91,878 vehicles during the quarter, a 16% year-over-year rise. Gross profit per sale rose not quite 50%, to $6,432 per vehicle. The company said it expects a "sequential increase" in year-over-year growth in terms of units sold and EBITDA.
"We are now focused on our long-term phase of driving profitable growth and pursuing our goal of becoming the largest and most profitable auto retailer and buying and selling millions of cars," Chief Executive Ernie Garcia III said in the earnings letter to shareholders.
Carvana currently lists many used Tesla vehicles with a price tag around $25,000. The cheap Tesla vehicles on Carvana are available as the EV giant obfuscates its own plans for its next-generation $25,000 model.
Carvana Stock Eyes Two-Year High
Carvana was caught out last year when used auto prices fell, leaving it sitting on a heavy inventory of comparatively expensive vehicles.
Shares rocketed 33.6% to 116.36 in Thursday's market trade, hitting its highest level since April 2022. The stock's been climbing a saw-toothed uptrend for the past 12 months. It has a year-to-date gain of 65% through Wednesday's close, and was trading just below it's March highs.
Avis gained 20% Thursday after reporting Q1 earnings. Meanwhile, Hertz rode the updraft, jumping 11.9%.
Alan Elliott contributed to this article.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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