Investors should load up on Carvana Co (NYSE: CVNA) following a more than 35% decline in its stock price since mid-February, says Alexander Potter – a Piper Sandler analyst.
Carvana shares have been hit hard in recent weeks amidst the broader market sell-off due to continued uncertainty coming out of the White House.
But all this weakness has done is created an opportunity for long term investors to buy a quality name at a deep discount, wrote Potter in a report on Thursday.
The Piper Sandler analyst upgraded CVNA shares this morning to “overweight”. His $225 price target indicates potential upside of close to 30% from current levels.
Carvana stock is insulated from Trump tariffs
Note that Potter’s take on Carvana shares is now different from the rest of the Wall Street. The consensus rating on the online used car retailer currently sits at “hold” only.
Alexander Potter upgraded Carvana stock this morning primarily because he sees it as the one stock that’s most insulated from Trump tariffs among all that he currently covers.
The Piper Sandler analyst agreed that macro uncertainty could lead to a hit to used car sales in the coming months, but remains convinced Carvana stock will still be able to resume its upward trajectory.
That’s because CVNA stock is uniquely positioned for growth after having “flirted” with bankruptcy once, he added in his research note.
CVNA has massive room for growth
Alexander Potter is convinced that Carvana will eventually be selling more than 3 million units annually. That suggests a remarkable increase from less than half-a-million in 2024.
Potter is bullish on CVNA shares also because the company currently owns only 1.0% used car sales market, which indicates massive further room for growth.
Plus, the company’s EBITDA margin sits in the low teens at writing, signalling strong profitability trajectory as well. According to Piper Sandler, Carvana may one day account for more than 10% of used car sales in the United States.
What’s also worth mentioning is that the firm’s $225 price target is still significantly below the high of about $285 that Carvana stock printed in mid-February.
Should you buy Carvana stock today?
Other reasons the Piper Sandler analyst cited for his bullish view on Carvana stock include the strength of its financials.
CVNA earned 56 cents a share in its latest reported quarter on $3.55 billion in revenue. Analysts, in comparison, were at 29 cents and $3.31 billion only. Ernie Garcia – the company’s chief executive told investors at the time:
We know this is just the beginning of our journey to change the way people buy and sell cars.
In February, Garcia also said that the news year (2025) was going to be another strong year for Carvana.
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