JP Morgan Keeps Buy on Carvana (CVNA) as Strategic Investments Drive Earnings Growth
Carvana Co. (NYSE:CVNA) is one of the 10 best growth stocks to buy according to billionaires. As of June 13, Carvana has surged over 45% YTD and has amassed share price gains of nearly 180% over the last one year.
The street expects its strong financial and operating performance to continue over the next two years. While revenue growth is projected to be around 20% to 30% over the next two years, adjusted EPS is expected to double from $3.15 in 2024 to $6.11 by 2026.
An auto warehouse filled with newly acquired used cars.
On June 13, JP Morgan analyst Rajat Gupta reiterated a Buy rating on Carvana, keeping the price target steady at $325. In his latest note, Gupta acknowledges the ongoing pressures in the used car market but notes that Carvana has emerged stronger following recent major restructuring efforts. The analyst notes that the company's digital model and focus on operational efficiency have helped it gain ground in a fragmented industry.
One key advantage, according to Gupta, is Carvana's investment in infrastructure, particularly the acquisition of ADESA. These developments are seen as difficult for peers to match and are expected to support above-average margins.
Gupta believes these efficiencies and strategic moves position Carvana well for sustained growth and could lead to upward earnings revisions over time.
While the company is performing well on a fundamental level, investors should also consider that the stock is a high-beta name, with a 5-year monthly beta of over 3.5. Stocks with high beta can lead to significant returns, but they also carry a higher risk of declines during market sell-offs.
Carvana is an e-commerce company specializing in the buying and selling of used cars.
While we acknowledge the potential of CVNA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
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