Wedbush Upgrades Used-Car Dealer Carvana to 'Outperform'—Raises Target Price to $400

(Seoul=Yonhap Infomax) Jang Won Lee Senior Reporter = Wedbush has upgraded its investment rating on online used-car dealer Carvana Co. (NYSE: CVNA) from 'Neutral' to 'Outperform'.

The 12-month price target was raised from $380 to $400.

According to CNBC on the 24th (U.S. local time), Wedbush expects Carvana to become the market leader by units sold in the U.S. used-car market by the fourth quarter of next year.

Carvana shares have surged 52% year-to-date, though the stock has corrected 13% over the past month.

Wedbush analyst Scott Devitt attributed the recent decline to "weak earnings from rival CarMax Inc. (NYSE: KMX) and broader concerns in the credit market, which have had a cascading effect on Carvana's share price."

However, Devitt argued that "the recent pullback is excessive," adding, "Investors should view this period of relative weakness as a buying opportunity."

He noted that Carvana's valuation has now reached a level that limits downside risk.

Devitt also highlighted that Carvana's management has recently demonstrated its ability to drive robust growth, and projected that Carvana will secure the top position in the used-car market by units sold by the fourth quarter of next year.

On the New York Stock Exchange, Carvana shares closed at $330.90 on the day, up $21.02, or 6.78%, from the previous session.

jang73@yna.co.kr

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