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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.