Shares of Carvana Co
The company should be able to generate sales growth and gain share by leveraging its digital-first customer experience and underutilized physical footprint, according to Needham.
The Carvana Analyst: Chris Pierce upgraded the rating for Carvana from Hold to Buy, while establishing a price target of $160.
The Carvana Thesis: The company is a "secular growth story with a cyclical recovery kicker," Pierce said in the upgrade note.
Carvana is poised for profitable growth, "with per unit sales growth and gross profit expansion, leveraging its mostly fixed-cost base, leveraging its mostly fixed-cost base," he added.
The current consensus estimates do not reflect Carvana's "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," the analyst wrote.
"A debt refinancing and lower interest payments is a possibility as well as the business and the interest rate environment improve," he further stated.
CVNA Price Action: Shares of Carvana rose by more than 6% to $134.24 at last check on Wednesday.
