Shares of Vroom (VRM) - Get VROOM INC. Report rose sharply Thursday after the online used car sales platform's first-quarter earnings received positive reviews from analysts and prompted some price target upgrades.
Shares of the New York company rose 5.44% to $35.85 at last check.
In its earnings posted after the close Wednesday, Vroom reported that revenue jumped 57% to $591.1 million, ahead of FactSet consensus estimates of $517.2 million, as consumer demand for cars and online purchases have surged during the pandemic.
Vroom widened its net loss to $77.19 million, or 57 cents a share, in the first quarter, from a loss of $41.06 million, or $4.85 a share, a year ago. The analyst consensus called for a loss of 63 cents in the latest quarter.
JPMorgan analyst Rajat Gupta said that after a couple of quarters of missteps on execution, Vroom's latest results and second-quarter guidance provided some comfort that the operating environment is stabilizing.
To be sure, Gupta doesn’t believe the company is fully out of the woods yet and would need visibility on sustained execution for an extended period for the stock to re-rate back to prior peak levels and meaningfully narrow the discount vs. peer Carvana (CVNA) - Get Carvana Co. Class A Report.
JPMorgan maintained an overweight rating and a price target of $60 on the stock.
Meanwhile, Raymond James analyst Nicholas Bacchus raised his price target on Vroom to $53 from $47.
Bacchus said the Vroom's outlook for the second quarter implies continued acceleration in e-commerce GPU (gross profit per unit), which is the critical metric now for investors in the stock.
The company has said that e-commerce unit sales nearly doubled.
Bacchus remains positive on shares given Vroom's ability to deliver years of strong growth as the second-largest pure play used-auto e-commerce platform.
He views the stock as a less expensive way to play the accelerating shift to digital commerce in auto, and maintains an outperform rating on the stock.
Wedbush analyst Seth Basham said Vroom is not only benefiting from strong market dynamics but also earning higher margins by nearly eliminating bottlenecks associated with its post-sales support processes.
Wedbush maintained its outperform rating and price target of $60 on the stock.