Jefferies upgrades Carvana to Hold, raises price target
Jefferies analysts have upgraded Carvana (CVNA) shares to Hold, previously rated at Underperform, and opted to raise the used car retailer's price target to $85 per share. Yahoo Finance Live details Jefferies note to investors on the stock.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
SEANA SMITH: Carvana shares moving to the upside. Jefferies upgrading the stock from underperform to hold, raising its price target from $30 a share, all the way to $85 a share, so just about $7 higher than where the stock is trading today. It is actually under a bit of pressure, off just about 3/10 of a percent.
But among the reasons that Jefferies is getting a little bit more, I guess on board with what Carvana is doing now, to put it-- maybe the best way here, since it is a hold rating, the analysts are saying that they are showing progress towards achieving positive cash flow, also reducing some of that downside risk that we've been talking about a number of times here at Yahoo Finance. The results in-- this all results in a more attractive risk-reward setup.
So we'll see. It's very much still a prove me, show me story for Carvana. And that stock, obviously a far cry from where it had been trading in the midst of the pandemic.
BRAD SMITH: You know my favorite acronym to demystify with Carvana-- it's the GPUs, not the graphics processing units, but the gross profit per unit that they sell. The recent expansion in that retail GPU actually suggests Carvana's operational adjustments may have driven sustainable improvement to unit economics. That's coming from the analysts over at Jefferies.
They're also saying that they see some early evidence that the company is successfully moving into a self-financed enterprise that's able to use some of that cash from operations that you were mentioning about a moment ago to fund more of that growth. What that growth looks like, we will see. I don't know if we'll see any more car dispensers in the near future, but that is something that they have been made popular for.
