Carvana Stock (CVNA) Nears $400 as Jefferies Upgrade Fuels Breakout Hopes

Carvana's stock (NYSE: CVNA) is exhibiting strong upward momentum, with its price approaching the $400 level, fueled by positive analyst upgrades and strategic company initiatives. The stock added 18.17% during yesterday's trading session and is currently trading around $395.

This surge in Carvana's stock price reflects increasing optimism surrounding the company's growth prospects and its ability to capitalize on the evolving used car market.

Jefferies recently upgraded Carvana to a ‘Buy' rating, increasing the price target from $385 to $475. This upgrade was based on consumer surveys, web analysis, and capacity assessments, suggesting that Carvana is well-positioned to deliver elevated growth and potentially exceed consensus estimates.

The firm also highlighted Carvana's fixed cost leverage as a key factor supporting revenue growth and expansion in unit economics, projecting “peer-high” EBITDA growth. Jefferies believes Carvana is best positioned to benefit from the shift to digital in the $800 billion used car market.

The consensus among 19 analysts is a ‘Buy' rating for Carvana's stock, with an average 12-month price target of $400.74. This consensus reflects confidence in Carvana's growth trajectory and its ability to navigate the evolving used car market landscape.

Carvana's recent financial performance has also bolstered market confidence. The company reported its first annual profit in 2023, achieving a net income of $150 million, a significant turnaround from a $2.89 billion loss the previous year. This improvement was driven by cost-cutting measures and a debt-reduction agreement with bondholders, reducing outstanding debt by over $1 billion.

In addition to financial improvements, Carvana has been actively expanding its services and enhancing customer convenience. The company has expanded its same-day delivery services to major markets, including the greater Chicago area, potentially driving further sales growth.

The positive momentum surrounding Carvana is supported by both fundamental improvements and optimistic market sentiment. As Carvana approaches the $400 threshold, all eyes will be on whether it can break through this resistance level and continue its upward trajectory.

The stock's performance in the coming days will likely depend on its ability to sustain its growth momentum and capitalize on the opportunities presented by the evolving used car market.