Skip to main content

Carvana Upgraded by Morgan Stanley on Expansion Potential

Morgan Stanley analyst Adam Jonas raised his share-price target on Carvana to a Wall Street high $420, after the used-car dealer posted strong revenue.
  • Author:
  • Publish date:

Carvana  (CVNA) - Get Carvana Co. Class A Report shares rose on Friday as Morgan Stanley analyst Adam Jonas upgraded the online used-car retailer and nearly doubled his price target on the stock, to a Wall Street high of $420 from $225.

Jonas upgraded the stock to overweight from equal weight. Jonas acted after Carvana posted revenue of $1.83 billion for the fourth quarter. That's up 65% from $1.1 billion in the year-earlier quarter and above the consensus analyst forecast of $1.6 billion.

The company's net loss widened to 87 cents a share from 82 cents in the year-earlier quarter. Shares outstanding rose 46% to 73.2 million.

Carvana has benefited from strong demand for autos and for contactless purchasing during the COVID pandemic. 

The stock recently traded at $293.63, up 11%. It has nearly tripled over the past year.

Scroll to Continue

TheStreet Recommends

To be sure, earlier this month Founder Jim Cramer warned about speculative froth in hot stocks like Carvana.

Jonas said in a commentary cited by Barron’s that Carvana "is uniquely positioned to serve an automotive and transportation [addressable market] that goes far beyond the used-car market, driving potentially far higher growth that is not reflected in today’s share price.” 

“In our opinion, describing Carvana as just a ‘used car dealer’ is like describing Amazon  (AMZN) - Get Inc. Report nearly two decades ago as just an online bookseller.”

Jonas also sees potential for Carvana to shine in related automotive and fleet-management segments. 

“While it may take several years before Carvana enters such markets at scale, … we don’t believe it’s too soon for investors to consider the outcomes today,” he said.

In December, Jefferies initiated coverage of Carvana with a buy rating and a price target of $300.