Stephens analysts initiated coverage on Carvana (NYSE:CVNA) with an Overweight rating and a price target of $190 on the stock. Shares rose more than 5% intra-day on Thursday.
The analysts view Carvana as a transformative force in the U.S. used vehicle retail market, the country’s largest consumer vertical. They highlighted the company’s innovative approach, combining a digital, virtual showroom with a regionally centralized backend, which drives economies of scale and superior financial performance across its operations. Carvana’s streamlined processes and cost-efficient structure allow it to deliver a higher-quality, more convenient, and lower-cost experience for consumers.
Currently, Carvana is already the most profitable player in the used vehicle space on a per-unit basis, and the analysts anticipate the company will achieve profitability on an EBITDA basis by the end of the year, despite holding only 1% market share. Over the past year, Carvana has made significant operational and financial strides, and the analysts believe the company is on the path to becoming a dominant retail force in the U.S., akin to major players like Home Depot, Ulta, and Chipotle.