- Needham analyst Chris Pierce anticipated CarGurus, Inc (NASDAQ:CARG) leveraging its industry-leading traffic metrics over the long term to create a compelling end-to-end digital solution for independent brick and mortar car dealerships.
- CARG would be uniquely positioned as an asset-light operator, operating a take rate vs. a heavy inventory model.
- In the shorter term, he saw investors more fully appreciate CARG's CarOffer acquisition as a way to play the digital transformation in the used car auction space. He saw it increase their importance to the dealer community and drive higher dealer count via cross-selling and potentially higher revenue per dealer while making them more likely to partner with CARG on a fully digital experience.
- He thinks CARG's multiple can expand as it shifts from primarily operating a lead-gen model to a fuller product suite helping dealers source buyers, transact digitally, and source and move inventory digitally.
- Pierce reiterated his Buy rating and $40 price target (72.5% upside) on the Needham Conviction List stock post conversations with 40 dealers across 15 states.
- Price Action: CARG shares traded higher by 0.73% at $22.69 on the last check Tuesday.
