Carvana (CVNA) is scheduled to announce its fourth-quarter results after the market closes on February 19. CVNA stock has rallied about 437% over the past year, thanks to the used-car retailer’s improving financials and turnaround initiatives. Investors even ignored short-seller Hindenburg Research’s allegations against CVNA earlier this year, which called its turnaround a “mirage” that is being driven by accounting manipulation and lenient underwriting practices. Wall Street is focused on the company’s fundamentals and the improvement in the used-car market trends.
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Analysts expect Carvana to report Q4 earnings per share (EPS) of $0.31 compared to a loss per share of $1.00 in the prior-year quarter. The bottom line improvement is expected to be driven by a 38% growth in revenue to $3.34 billion and the company’s cost reduction efforts.
Analysts’ Sentiment Ahead of CVNA’s Q4 Results
Heading into the Q4 results, Bank of America Securities analyst Michael McGovern reaffirmed a Buy rating on CVNA stock with a price target of $252. The analyst noted that data from Cox Automotive revealed a 12% year-over-year unit growth for retail used car sales in December, indicating acceleration compared to the 10% rise in November.
McGovern added that Wall Street expects 43% year-over-year retail unit growth for Carvana in Q4, which would mark an acceleration from 34% in the third quarter. He said that the solid industry growth rates give him incremental confidence about management’s guidance for acceleration in Q4 growth. McGovern also highlighted that strong demand is offsetting the negative impact of high interest rates, thanks to lower used-car prices and a shift from new car sales.
Recently, JPMorgan analyst Rajat Gupta reaffirmed a Buy rating on CVNA stock and increased the price target to $350 from $300. Gupta is confident about Carvana stock witnessing another year of outperformance in 2025, with the potential for further multiple expansion. The five-star analyst contends that as the dust settles around the dynamics of the company’s lending arm and related economics, it is important for investors’ focus to shift back to the core areas of CVNA’s business, which have driven the recent turnaround in growth and profitability.
Insights from TipRanks’ Website Traffic Tool
TipRanks’ Website Traffic Tool indicates that visits to Carvana’s website jumped more than 35% year-over-year and increased 5.5% sequentially in Q4 2024. These favorable trends bode well for the revenue of the online used-car retailer.
Options Traders Anticipate a Major Move on CVNA’s Q4 Earnings
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 14.2% move in either direction in reaction to Carvana’s Q4 2024 results.
Is CVNA a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on Carvana stock based on eight Buys and four Holds. The average CVNA stock price target of $285.36 implies the stock is fully valued at current levels.
