Carvana Drives Profitability With Stronger Unit Sales In 'Another Sterling Quarter,' 4 Analysts Are Optimistic

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Shares of Carvana Co (NYSE: CVNA) climbed in early trading on Thursday, after the company reporting upbeat second-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

  • Piper Sandler analyst Alexander Potter reiterated a Neutral rating, while raising the price target from $105 to $151.
  • Needham analyst Chris Pierce maintained a Buy rating, while lifting the price target from $160 to $200.
  • RBC Capital Markets analyst Brad Erickson reaffirmed a Sector Perform rating, while raising the price target from $130 to $170.
  • Oppenheimer analyst Brian Nagel reiterated a Perform rating on the stock.
Piper Sandler: Carvana reported quarterly revenues of $3.38 billion, "12.5% higher than our estimate of $3B," Potter said. "The upside was driven largely by higher-than-expected retail units sold (+33% y/y)."

The company's third-quarter retail unit sales are expected to grow sequentially, the analyst stated. "The past two quarters provide evidence that recent profitability gains are here to stay," he further wrote.

Needham: Carvana has "unique industry positioning and physical and technology moats set to drive a long runway of share gains, while leveraging improved internal processes to drive industry-leading gross profits per unit," Pierce wrote.

The company plans to increase vehicle production, with higher levels of inventory triggering higher conversions and unit sales, the analyst stated. "The next leg of CVNA's growth is profitable unit growth," he further said.

RBC Capital Markets: Carvana delivered "another sterling quarter" and the company's per unit profitability continues to improve, Erickson said. The company's units are "finally starting to show an inflection - and without any change in marketing," he added.

"Positively from here, calling for a ceiling to unit growth acceleration could be very challenging (& dangerous if short), GPU expansion (y/y) likely still has more to go and the company is focused on EBITDA expansion for the purpose of de-levering the balance sheet," the analyst wrote.

Oppenheimer: Carvana's used unit sales "tracked at 101.4K, well ahead of Street expectations for 95.1K, and up 24.9K units from 76.5K in Q223, despite still constrained inventories at the company, Nagel said in a note.

"To meet strong demand, senior leadership has continued to focus on increasing production capacity, while simultaneously reiterating its commitment to balancing costs, as it returns to growth," the analyst wrote. Management expects to pass on "an increasing proportion of incremental efficiencies to customers, through sharper pricing and better inventory selection."

CVNA Price Action: Shares of Carvana had risen by 7.16% to $142.77 at the time of publication on Thursday.