Shares of Carvana (NYSE: CVNA) drove higher in morning trading on Tuesday after JP Morgan analyst Rajat Gupta upgraded the stock of the online retailer of used cars to a Hold from a Sell. Gupta has a price target of $20 on the stock implying an upside potential of 27.1% at current levels.
The analyst pointed out that Caravana is likely to raise capital before becoming able to fund itself. Gupta stated, “We believe Carvana’s approach to retailing used vehicles has given it a multi-year head start in the online-only space of a fragmented used vehicle industry, allowing it to expand at a rapid pace.”
The top-rated analyst is of the view that CVNA’s recent moves of investment in its infrastructure and expansion of its network, including its recent $2.2 billion acquisition of ADESA’s physical auction business in the U.S., could give CVNA an edge over its competitors.