Why Is Carvana (CVNA) Stock Up 15% Today?

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Carvana (NYSE:CVNA) stock is climbing higher on Tuesday after JPMorgan analyst Rajat Gupta upgraded the company’s shares.

That upgrade has the JPMorgan analyst bumping shares of CVNA stock up from an “underweight” rating to a new “neutral” rating. For comparison, the current consensus rating for Carvana stock is “hold.” That’s based on nine “buy” ratings and 13 “hold” ratings.

One thing that hasn’t changed is Gupta maintaining his price target of $20 per share for CVNA stock. That represents a nearly 48% upside from the stock’s closing price on Monday. To put that in perspective, the analyst consensus price prediction for Carvana stock is $49.55 per share.

Why The Bullish Switch for CVNA Stock?

The JPMorgan analysts gave the following reasoning in a note obtained by CNBC.

“Importantly, as we highlighted in our preview, carve-outs in their debt indentures allow for an additional ~$4bn+ of debt which can be borrowed on a secured basis. Clearly, these are not ideal outcomes and will be very expensive, but any progress demonstrated on tapping even a slice of the $2 bn in real estate, could temporarily shun concerns around liquidity and thus, survivability.”

Despite the upgrade, CVNA stock isn’t seeing heavy trading. Only about 3 million shares have changed hands as of this writing. The company’s daily average trading volume is well above that at about 10.5 million shares.

CVNA stock is up 15.6% as of Tuesday morning but is down 93.4% since the start of the year.

Investors seeking out more of the latest stock market news are in luck!

We’ve got traders covered with all of the hottest stock market stories for Tuesday! That includes what has shares of Abiomed (NASDAQ:ABMD) stock and SoFi Technologies (NASDAQ:SOFI) stock on the move, as well as this morning’s biggest pre-market stock movers. You can read up on all of that news at the following links!

More Tuesday Stock Market News

On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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