Carvana stock returned to a buy zone on Wednesday and CarMax shares popped after the latest Mannheim used-car value report. Carvana also earned a Street-high price target and unveiled website upgrades to make shopping for used electric vehicles easier.
In June, retail used-vehicle sales fell 5% month over month but rose 3% year over year, Cox Automotive said on Tuesday afternoon.
The Manheim Used Vehicle Value Index fell to 196.1 in June, ending the first half of 2024 down 8.9%.
June's decline marked another month of a slide that began in 2021, Mannheim parent Cox Auto said. However, the firm said signs look positive for the rest of the year.
"We think the decline may be nearing its floor, which should help stabilize the market through the summer months and rebound in the back half of the year," said Jonathan Smoke, of Cox Automotive. "Between increasing demand, slowing price declines, and slightly better interest rates, all of our indicators point to an optimistic outlook for the rest of the year. We may even see a few months of growth before the end of 2024."
Meanwhile, soothing inflation data could kick the door open to Fed rate cuts, which would boost auto stocks and auto dealer stocks at large.
On Wednesday, Needham analyst Chris Pierce called Carvana a "profitable secular growth story," with increasing retail unit sales and improving gross profit per unit.
He upgraded Carvana shares to buy from hold, with a price target of $160, the highest on Wall Street.
And Carvana announced the launch of new features to make buying a used electric vehicle or plug-in hybrid vehicle easier. Customers can now search for vehicles qualifying for EV tax credits and apply up to $4,000 in savings at the checkout. "These savings also automatically flow through to eligible customers' financing terms," the Carvana news release said.
Carvana will report earnings for the second quarter on July 31, after the market close.
Carvana Stock, CarMax And Auto Retail Stocks
Shares of the online used-car retailer jumped 4.2% to 130.97 on the stock market today, paring gains. Carvana stock on Wednesday topped the buy zone from a 129 cup-shape entry. It first cleared that buy point on June 25.
Carvana stock has more than doubled from a February cup-base breakout, vaulting 115%.
Among other auto retail stocks, CarMax stock surged 6.4% on Wednesday, extending its recent rally above the 50- and 200-day lines. But CarGurus fell 0.2%.
AutoNation, Group 1 Automotive, Lithia Motors and CarMax all show lagging relative strength lines this year.
Several analysts have raised price targets on CVNA stock since the company updated its operating plan and capital structure on June 6. Those include analysts at JMP Securities, JPMorgan and Evercore.
Carvana disrupted the auto retail industry with its model for buying and selling used cars online. In June, the company said it continues to make progress on "profitability initiatives and unit economics," allowing it to reduce debt over time.
The company faced bankruptcy concerns in 2022, tanking shares.
Carvana stock has rocketed nearly 2,600% since the end of 2022 on turnaround initiatives. But it remains below the August 2021 high.
