Carvana Co. (NYSE:CVNA) is accelerating its dealer shift driven by a digital, vertically integrated model as credit concerns ease and demand remains resilient.
Needhams Mackenzie Holleran confirmed a Buy on Caravanna with a goal of $500.
She said Carvana is leading the shift from traditional auto retailing to a digital, data-driven, capital-efficient, vertically integrated model.
That approach, she says, delivers a cleaner, more attractive buying experience than incumbents and should create meaningful value over several years.
Also read: The subprime car market is dawning: how bad can it get?
Holleran’s $500 price forecast implies a 35x multiple of expected 2027 adjusted EBITDA, supported by a sustainable, profitable growth profile.
She said the fear surrounding subprime exposure is over-extrapolated and often entrenched in Carvana’s previously fragile businesses. If creditworthiness deteriorates, she modeled two effects.
First, there is a one-time ‘Other GPU’ hit due to timing, as credit rates adjust and spreads normalize.
Second, a reassessment of long-term unit growth, with longer-term investors likely to look past the temporary drag.
She added that consensus unit growth is already screened conservatively, lowering the risk of negative revisions.
Holleran’s vision is enhanced by improving the supply of used vehicles and lowering rates. She expects lower average sales prices and smaller monthly payments will offset the tighter credit. Against this background, she believes that demand for units should continue.
The analyst expects the company to report revenues of $18.491 billion in 2025, with EBITDA of $2.100 billion.
Price promotion: CVNA shares are trading up 2.21% at $349.50 at last check on Friday.
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