Carvana Up on Initial Buy Rating Tied to Growth Opportunity

Jefferies initiated Carvana shares at buy on its growth potential and the ease it brings to car buying, a media report says.
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Carvana  (CVNA) - Get Report shares rose Friday after Jefferies analysts initiated coverage of the online used car dealer with a buy rating and a price target of $300.

They acted on Carvana’s growth potential and the ease it brings to car buying, Bloomberg reports. 

Carvana, Tempe, Ariz., benefits from easy comparisons amid the coronavirus pandemic, giving it a stellar opportunity for growth next year, the analysts said.

The pandemic depressed auto sales in the early months, as production plants were shuttered and buyers were hesitant. 

But sales have rebounded over the past few months, as consumers have sought transportation that lessens the risk of catching Covid.

Carvana’s stock could double if it maintains its historical pace of growing market share, the analysts said.

The stock recently traded at $237.25, up 4.1%. It has well more than doubled year to date.

Meanwhile, the analysts began coverage of Vroom  (VRM) - Get Report, a competitor to Carvana, with a hold rating and price target of $38. 

The New York company ranks second in the space, far behind Carvana, selling one car for every seven sold by Carvana, they said, according to Bloomberg.

To be sure, they see that metric improving for Vroom -- to one for every three by 2023. That will result as Vroom improves the consumer experience, unveils value-added products and makes more less expensive cars available, they said.

Vroom recently traded up 0.8% at $33.52. The stock has slumped 31% year to data.

The analysts also initiated coverage of CarGurus  (CARG) - Get Report, another online auto seller, at hold with a price target of $26. 

They said it has slipped from its formerly top position, Bloomberg reports. The stock recently traded at $25.27, up 0.6%. It has dropped 29% year to date.