JMP Securities Raises Carvana Co's Price Target by 68.8% on Strong Q1 Performance

JMP Securities's Nicholas Jones raised their price target on Carvana Co (NYSE: CVNA) by 68.8% from $80 to $135 on 2024/05/03. The analyst maintained their Buy rating on the stock.

This price target hike comes in response to Carvana Co's impressive Q1 2024 earnings report, which was released on May 1st, 2024. Despite facing inventory restrictions due to surging client demand, Carvana managed to deliver strong results on both the top and bottom lines. Jones believes that the market is undervaluing Carvana's improved operating structure, which allows the company to expand rapidly while keeping expenses in check.

In the first quarter of 2024, Carvana Co reported a loss per share of $0.41, surpassing the Zacks Consensus Estimate of $(0.76) by a substantial 72.9%. This also represented a significant improvement compared to the loss per share of $(1.51) reported in Q1 2023. Furthermore, Carvana's revenue for the quarter came in at $3.06 billion, beating the Zacks Consensus Estimate by 12.74% and showing a 17% increase from Q1 2023's $2.61 billion.

Carvana also reported impressive retail unit sales, with 91,878 units sold in Q1 2024, representing a 16% year-over-year increase. The company's EBITDA for the quarter stood at $235 million, a dramatic improvement from the $(24) million reported in Q1 2023.

Looking ahead, Carvana's management provided guidance for Q2 2024, expecting quarter-over-quarter growth in retail unit sales and an increase in EBITDA. Founder and CEO Ernie Garcia expressed confidence in Carvana's online retail model, stating that the company's strong Q1 results validate their belief in achieving industry-leading profitability while delivering exceptional customer experiences. Garcia also highlighted Carvana's potential for future growth and the opportunity to become the largest and most profitable automotive retailer.

In addition to the Carvana Co rating upgrade, JMP Securities analyst Nicholas Jones also lowered their price target on Opendoor Technologies Inc (NYSE: OPEN) by -11.1%, from $4.5 to $4, while maintaining a Buy rating on the stock.

Currently, 28.6% of top-rated analysts consider Carvana Co as a Strong Buy or Buy, while 57.1% view it as a Hold. On the other hand, 14.3% either recommend or strongly recommend selling the stock. The consensus forecast among analysts is that Carvana Co will deliver earnings per share (EPS) of $6.76 in the upcoming year, representing a 20.2% increase on a year-over-year basis.

Carvana Co's stock price has seen significant growth since the release of its latest quarterly report. Since May 1st, 2024, the stock price has surged by 34%. Looking at the year-over-year performance, Carvana Co has outpaced the S&P 500, with its stock price showing an impressive 932.4% increase compared to the index's 25.4% growth.

JMP Securities analyst Nicholas Jones is highly regarded within the industry, ranking in the top 1% of Wall Street analysts according to WallStreetZen. With an average return of 35.1% and a 47.5% win rate, Jones specializes in various sectors, including Consumer Cyclical and Financial Services.

Carvana Co, founded in 2012 and based in Tempe, Arizona, operates an e-commerce platform for buying and selling used cars. The platform offers customers the ability to research and identify vehicles, inspect them using Carvana's 360-degree vehicle imaging technology, obtain financing and warranty coverage, make the purchase, and schedule delivery or pick-up, all through desktop or mobile devices.

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