Carvana Co. (NYSE: NYSE:CVNA) had its price target increased by TD Cowen to $148.00, up from the previous target of $110.00, while the firm retained a Hold rating on the stock.
The adjustment follows Carvana's announcement of a significant 32.5% year-over-year increase in retail unit sales for the second quarter, surpassing expectations on several financial metrics.
Revenue for the online used car retailer climbed by 14.9% year-over-year, exceeding both TD Cowen's and consensus estimates by 3% and 5% respectively.
Additionally, the company reported an EBITDA of $355 million, which notably surpassed TD Cowen's estimate by 44%, attributed to cost leverage within the company's operations.
Management at Carvana has provided guidance for third-quarter unit sales to exceed the second quarter's performance, indicating a year-over-year growth rate of over 25%. The forecast is significantly higher than TD Cowen's previous estimate of 15% year-over-year growth.
Furthermore, the company's projections for 2024 EBITDA range between $1 billion and $1.2 billion, which stands above the consensus estimate of $890 million.
InvestingPro Insights
Carvana Co. (NYSE:CVNA) has demonstrated a robust performance with a notable 32.5% increase in retail unit sales year-over-year for the second quarter, which is a positive indicator for investors. According to InvestingPro data, Carvana currently boasts a market capitalization of $29.81 billion and has seen a significant 213.26% price total return over the last six months. This aligns with the strong momentum reflected in the after-hours trading bump following the company's recent financial update.
InvestingPro Tips highlight that Carvana is trading at a low P/E ratio relative to near-term earnings growth, with a current P/E ratio of 67.92. Despite this, analysts remain cautious, given the weak gross profit margins of 17.58% and the expectation that net income will drop this year. On the flip side, Carvana's liquid assets exceed its short-term obligations, indicating a degree of financial flexibility. The company also operates with a moderate level of debt, which could be a reassuring factor for investors considering the company's growth prospects.
For investors seeking a more in-depth analysis, there are 16 additional InvestingPro Tips available at https://www.investing.com/pro/CVNA. These tips could provide further guidance on the company's valuation multiples and profitability outlook, which are critical when assessing Carvana's potential for long-term investment.
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