Carvana Co. (NYSE: CVNA), has been one of those quintessential millionaire-makers over the last two years. But a JPMorgan Analyst continues to see a significant increase in its share price by 2025.
Rajat Gupta increased his price target for CVNA to $350 this morning, which indicates a potential 40% increase from current levels.
In a research note he sent to clients on Friday, he said that positive revisions and multiple expansions would help Carvana’s stock reach new highs in 2018.
Carvana stock is a good investment for those with financial strength
JPM is extremely bullish on Carvana’s shares, primarily because of the company’s strong financial health.
The online used-car retailer earned 64 cents per share on revenue of $3.65 billion during its most recent reported quarter. Analysts, on the other hand, only had 25 cents a share and $3.45 billion revenue.
The New York-listed company expressed optimism that its full-year EBITDA adjusted is on track to print well above its prior target of up to $1.25 billion.
CVNA will now report its Q4 earnings at the 19 th. It is expected to earn 25 cents per share, compared to a loss of $1 a year earlier.
Carvana does not pay a dividend at this time.
CVNA has plenty of liquidity on its balance sheet
Gupta is bullish about Carvana’s stock, also because the online used-car retailer recently signed a contract with Ally Bank to sell automotive financing receivables up to $4.0 billion.
The agreement will result in a significant capital influx for CVNA, which will boost its liquidity as well as its growth initiatives.
The Tempe, AZ-based company ended its third quarter with a total liquidity of about $1.1 billion. This includes cash and cash equivalents as well as available borrowing under a credit facility.
Carvana shares still trade at a significant discount to their all-time high of $361.
Carvana technicals also point upwards
Investors should know that JPMorgan is not the only investment company that has a positive view of Carvana.
Bank of America, Citigroup, Needham and RBC are among those who have recently reiterated buy ratings for shares of the online car retailer, citing the potential of continued growth in retail unit sales.
Analysts are bullish about Carvana stock because they expect it to quickly increase its inventory and meet rapidly growing consumer demands.
As shown in the chart, CVNA shares are a good buy from a technical standpoint. They have recently broken through key resistance at $234.
The setup is strong for the NYSE listed firm to continue its rally if its financials results are above Street estimates on the 19 th.
This post JPM raises Carvana Stock Target: How high could CVNA rise in 2025? This post may be updated as new information unfolds
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