An attractive buying opportunity has emerged after a recent sell-off in Carvana , according to RBC. The bank upgraded online car seller to outperform from sector perform. Analyst Brad Erickson also raised his price target to $280 from $270, implying upside of 48%.
Carvana shares dropped nearly 22% in December and are already down 7% in January. That said, the stock managed a stunning 284% gain in 2024 despite last month's steep pullback. CVNA 1Y mountain CVNA 1Y chart "After CVNA's remarkable turnaround last year, we see the controversial pullback as an opportunity .
.. with the primary upside drivers being likely further volume momentum and more durable GPU than feared," Erickson wrote.
The analyst raised his estimates around 4% above Wall Street consensus for the fourth quarter and 2% for 2025 and "could still wind up overly-conservative," he predicted. "We believe Street estimates under-estimate CVNA's market share ramp unless its major cohorts start underperforming relative to years of predictable development," he wrote. While Carvana's gross profit per unit levels already outpace the industry's average, Erickson sees further growth ahead as the company's inventory pools expand.
He added that the retail marketplace can become a more "meaningful contributor" to unit growth going forward. Meanwhile, Carvana has made strides to pay down and refinance its debt, which over time will contribute to a stronger balance sheet, Erickson wrote. Analyst sentiment on the stock is mixed.
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