Citigroup Doubles Carvana’s PT On Higher Sales Bet

Citigroup raised Carvana’s price target to $240 (26.3% upside potential) from $120, citing expectations for higher unit sales driven by the online shopping boom. Shares in the e-commerce company for buying and selling used cars, are rising 1.6% in pre-market trading on Tuesday.

Citigroup analyst Nicholas Jones maintained a Buy rating on Carvana (CVNA), saying that “the odds of the company reaching its 2M retail unit per year long-term target have increased dramatically” with “consumer preferences having rapidly shifted.”

On Aug. 5, Carvana reported a 2Q loss of $0.62 per share, compared with analysts’ expectations for a loss of $0.79 per share. 2Q revenues of $1.12 billion increased 13% year-over-year but missed the analysts’ estimates of $1.15 billion.

Carvana CEO Ernie Garcia and CFO Mark Jenkins said in a letter to shareholders that the “current inventory is meaningfully limiting sales, making growing inventory our top company priority.” They added that the second quarter “started at the peak of Covid-19 related economic disruption and ended with structural shifts in customer preferences leading to the strongest demand we have ever seen.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 10 Buys and 5 Holds. Following this year’s 107% stock rally, the average price target of $189.71 now implies that shares are almost fully priced. (See CVNA stock analysis on TipRanks).

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