On Friday, Baird raised its stock price target on shares of Carvana Co. (NYSE:CVNA) to $65 from $60, while keeping a neutral rating on the stock. The firm's analyst cited potential for better-than-expected retail unit sales and gross profit per unit (GPU) in the first and second quarter as reasons for the adjustment.
Carvana, known for its online car buying and selling platform, appears to be entering the third phase of its turnaround plan, which focuses on returning to growth. This shift is indicated by trends in search data and job postings.
The analyst acknowledged the stock's contentious position in the market but commended the Carvana management team for their disciplined approach to stabilizing the company's operations, maneuvering through challenging capital markets, and achieving positive adjusted EBITDA.
Despite the price target increase, the firm expressed a desire to observe sustainable profitable growth as Carvana's unit volumes increase entering this new phase. The company's efforts to stabilize and grow have been noted, yet the firm's stance remains cautiously optimistic, looking for further evidence of progress in Carvana's business model and financial performance.
The raised stock price target reflects a modestly more positive outlook on Carvana's near-term prospects, while the neutral rating suggests that the firm is waiting for additional signs of long-term success before changing its stance on the stock.
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