RBC has identified a buying opportunity in Carvana following a recent sell-off, prompting an upgrade of the stock to “outperform” from “sector perform.” Analyst Brad Erickson raised the price target from $270 to $280, suggesting a potential upside of 48%. Carvana shares fell nearly 22% in December and 7% in January, despite a remarkable 284% gain in 2024. Erickson views the recent pullback as an opportunity, driven by anticipated volume momentum and better gross profit per unit (GPU) performance than expected. He increased his estimates for the fourth quarter and 2025 by around 4% and 2%, respectively, noting that Wall Street may be underestimating Carvana’s market share potential. Although Carvana’s GPU already surpasses the industry average, there is potential for further growth as inventory increases and the retail marketplace contributes more significantly to unit growth. Carvana is also actively working on debt reduction and refinancing to strengthen its balance sheet. Sentiment among analysts is mixed, with nine out of 24 rating the stock as buy or strong buy. The average price target suggests nearly 30% upside potential.
