Carvana price target raised to $150 from $130 at JPMorgan

JPMorgan raised the firm’s price target on Carvana to $150 from $130 and keeps an Overweight rating on the shares. While the used car market has seen a partial recovery year-to-date driven by a combination of slightly better affordability and temporarily better commercial auction supply, JPMorgan sees lingering supply constraints, both cyclical and structural, that is likely to “put a lid on any inflection in unit sales” over the next 12-18 months, the analyst tells investors in a research note. Given the combination of still tough affordability backdrop for consumers, choppy used car supply and industry volumes that have been running below normalized levels and record average car age, the firm pivoted its rating preference to companies that have a more visible positive earnings revision backdrop driven by company-specific execution opportunities and/or unique secular tailwinds. Carvana (CVNA) is its top pick in the retail ecosystem.