Carvana (CVNA) Stock Forecast & Price Target

Carvana Co is demonstrating substantial growth potential, with fourth-quarter revenue projected to reach $5.2 billion, reflecting a 46.4% year-over-year increase, alongside an estimated 36.3% growth in used vehicle unit sales. The company has successfully increased its reconditioning capacity, allowing for improved inventory management and a more favorable position in the competitive used car market, positioning it to surpass CarMax’s unit volumes ahead of initial forecasts. Additionally, the appreciation of Carvana's shares by over 50% year-to-date, coupled with a contracting multiple, suggests a strengthening trajectory for the company’s EBITDA, reinforcing the positive outlook for its financial performance.

The analysis indicates that Carvana Co is experiencing declining sales trends, with total used vehicle unit sales volume dropping 2% year-over-year in the third quarter, a significant deceleration from an 8% year-over-year increase in the second quarter. Furthermore, Carvana's shares are trading at 22 times the estimated earnings per share for 2027, which represents a tighter valuation relative to peer company CarMax, amidst rising concerns in credit markets that may impact consumer financing. Additionally, the underperformance of Carvana’s stock, which has decreased approximately 13% over the past month, is largely attributed to disappointing performance indicators from CarMax and an overarching negative sentiment in the automotive retail sector.