Profitable growth ahead for Carvana – Needham & Company

Carvana (CVNA) was lifted to Buy from Hold at Needham & Company with a price target of $160 per share. The firm sees profitable growth ahead for the company.

“We think CVNA can grow unit sales and industry share by leveraging its digital-first customer experience and under-utilized physical footprint,” said analysts.

After a volatile past the firm sees CVNA becoming a “profitable secular growth story,” citing increasing retail unit sales and improving gross profit per unit metrics from leveraging a high-fixed-cost base.

“We think the consensus retail unit estimate has troughed, and does not yet anticipate the approaching recovery, upside from management’s explicit pivot to unit growth and optimizations at acquired CVNA IRCs and Adesa locations, or the benefits of a stabilized balance sheet,” adds analysts.

“Our $160 price target is 25x our ~20%-above-consensus ’26 adj EBITDA estimate discounted back, which is still a discount to the 30%+ adj EBITDA CAGR we model.”