Carvana (NYSE:CVNA) just got a major vote of confidence from Wall Street. After taking heat from a short-seller report by Hindenburg Research that called its recovery a "mirage," the online auto retailer has bounced back, gaining 7% in early trading. Key analysts are dismissing the claims, pointing to Carvana's strong fundamentals and renewed $4 billion loan receivables deal with Ally Financial (NYSE:ALLY) as proof the company is firmly on track.
Needham reaffirmed its "Buy" rating, doubling down with a $330 price target. Their reasoning? Carvana's record-breaking unit growth, industry-leading gross profit margins, and stellar financial healthbacked by a perfect Piotroski Score of 9. RBC Capital is equally bullish, upgrading the stock to "Outperform," citing sustainable profit metrics and the Ally deal as a sign that partnerships remain intact despite the noise. With a over 300% return over the past year, Carvana's stock performance continues to defy its critics.
What's driving the optimism? Carvana's turnaround story is nothing short of remarkable. In Q3, the company posted $337 million in operating income and a 32% revenue boost, signaling a profitability milestone after years of turbulence. Analysts see Carvana navigating industry-wide challengeslike tighter credit conditionswith confidence, making it a standout in the auto retail sector. Bottom line: the short-seller attack may have rattled the market, but Carvana's fundamentals tell a different story, and investors are paying attention.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.