Key Takeaways
- Carvana shares surged Tuesday as the online used car retailer’s stock got an upgrade from Morgan Stanley analysts.
- The analysts called Carvana’s recent share price decline a “unique opportunity” for investors to buy in.
- They said Carvana’s scale and other advantages could turn it into an “Amazon of auto retail.”
Carvana (CVNA) shares surged Tuesday after the online used car retailer’s stock got an upgrade from Morgan Stanley analysts.
The analysts boosted their rating to “overweight” from “equal-weight” and raised their price target to $280 from $260 previously, suggesting more than 25% upside from Tuesday’s intraday level. Shares of the car seller were up close to 5% in recent trading, and have more than doubled in value in the last 12 months.
The analysts told clients they believe stock’s recent slide from a Valentine’s Day closing peak of $285.33 could present a “unique opportunity for investors to gain exposure to a leader in auto retail and fleet fulfillment.” Their new price target is just slightly below the average price target of $287 among the analysts tracked by Visible Alpha, nine of which give Carvana a “buy” or equivalent rating, while three rate it as a “hold.”
Morgan Stanley Sees Strong Growth Trajectory
The analysts at Morgan Stanley said their recent tour of a Carvana facility in Florida “reinforced the company’s competitive advantages with vertical integration and scale,” calling the company “a potential ‘Amazon (AMZN) of auto retail.'”
They said that Carvana’s most recent earnings report, which saw profits top expectations last month, “make a strong case for the company to have proven profitable growth is more than just a temporary phenomenon.”
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