Alexander Potter, a Piper Sandler Analyst says that investors should buy Carvana Co. (NYSE: CVNA), following the more than 35% drop in its share price since February.
Carvana’s shares were hit in the recent weeks amid the general market decline due to the continued unrest coming from the White House.
Potter wrote in a Thursday report that this weakness created an opportunity to long-term investors who want to purchase a high quality brand at a discount.
Piper Sandler’s analyst, this morning, upgraded CVNA to “overweight”. The analyst’s $225 target price indicates a potential gain of nearly 30% over current prices.
Carvana stocks are protected from Trump’s tariffs
Potter’s view on Carvana is different now from that of Wall Street. The online used-car retailer’s consensus rating is currently “hold”.
Alexander Potter has upgraded Carvana’s stock today, primarily due to the fact that it is his favorite stock among those he covers.
Piper Sandler’s analyst acknowledged that macro-uncertainty could have a negative impact on used car sales over the next few months. However, he remains confident Carvana will be able resume its upward trend.
In his research note, he explained that CVNA is uniquely poised for growth because it has “flirted”, once with bankruptcy.
CVNA still has huge room to grow
Alexander Potter believes that Carvana’s annual sales will surpass 3 million. This is a significant increase from the less than 500,000 units sold in 2024.
Potter’s bullishness on CVNA is also due to the fact that CVNA currently only owns 1.0% of the used vehicle sales market. This indicates a huge room for further growth.
The company also has an EBITDA that is in the teens, indicating a strong profit trajectory. Piper Sandler claims that Carvana could one day represent more than 10% used vehicle sales in the United States.
It’s worth noting that Carvana’s stock reached a high in February of $285.
Why should you invest in Carvana today?
The analyst at Piper Sandler also cited the stock’s strong financials as another reason for its bullish outlook.
CVNA reported a 56-cent share on revenue of $3.55billion in the latest quarter. Comparatively, analysts were only at 29 cents on $3.31 billion. Ernie Garcia, the chief executive of the company at that time told investors:
This is only the beginning. We will continue to work hard and change how people purchase cars.
Garcia said in February that Carvana’s news year, 2025, will be a strong one.
The information contained in this article Carvana stocks crashes 35% – is CVNA losing steam? This post may change as new information unfolds
