Carvana (CVNA) and the used car space are "situated well" to take advantage of ongoing trade disruptions as tariffs likely drive up prices for new automobiles, Oppenheimer said in a Friday note.
The company has worked to restructure its balance sheet and improve cost efficiencies at the chain, which allowed it to deliver sustained profitability, Oppenheimer analysts said. Its business model is now "much better-positioned" as consumer demand across the used car space is now solidifying, they said.
Carvana recently stated plans for used car unit sales of 3 million annually over the next five to 10 years, which should drive "substantial" longer-term profit potential, the analysts said. Market share gains in the used car market should be a key driver of sales and productivity increases for the company in the foreseeable future, they said.
Carnava's shares have rebounded to all-time highs, but investors still underappreciate the growth and profit potential of the company, the analysts said. The company "represents a unique, digitally driven disruptor within the expansive and inefficient domestic used car marketplace," they stated.
Oppenheimer upgraded the company's stock rating to outperform from perform and established a price target of $450.
Price: 333.88, Change: +7.79, Percent Change: +2.39
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