Sign InCarvana Co. (CVNA) Shows Strong Technical and Fundamental Potential for Upside
Summary
Carvana Co. (CVNA) closed at $49.11 on August 1, 2023, posting a 6.88% gain of $3.16 in a single trading session, and with a solid potential for upside in the coming week, it is presently categorized as a 'Hold' for investors.
Technical Analysis
Carvana Co. (CVNA) closed at $49.11 on August 1, 2023, posting a 6.88% gain of $3.16 in a single trading session. The intraday range was $44 to $49.80. The stock ended the day with a trading volume of 19.21 million shares, below the average volume of 32.14 million shares.
Technically, CVNA's long-term trend appears bullish given the 200-day moving average of $13.49. The 50-day moving average, on the other hand, stands at $26.90, suggesting a shorter-term uptrend. The stock has exceeded both these levels, indicating a strong upward momentum.
The MACD (3-month), an often-used momentum indicator, is positive at 8.22, further supporting the bullish view. The Relative Strength Index (RSI14), a momentum oscillator that measures the speed and change of price movements, is at 61; this suggests neither overbought nor oversold conditions currently, sitting in the neutral zone.
Fundamental Analysis
Carvana Co. has a market capitalization of $8.72 billion. The company's earnings-per-share (EPS) currently stands at -$4.18, with a negative price-to-earnings (PE) ratio of -11.74, indicating that the company is not profitable at this time. However, the discounted cash flow (DCF) analysis suggests a higher intrinsic value at $53.41, indicating that the stock could be undervalued at the current trading price.
There's a notable discrepancy among the target forecast prices. The high target presents a significantly optimistic view at $470, while the low target suggests a pessimistic estimate of $5. The consensus target price of $113.21 and median target price of $73 also reveal a wide gap.
News Impact and Company Updates
Recent news trends reflect mixed views on Carvana Co.'s progress. Amid risks facing the used-car retailer industry and a recent downgraded rating, the company's stock faced a decrease in price targets, with one analyst dropping the target from $55 to $30.
However, the surge in CVNA's stock price has attracted attention, with it jumping 892% in 2023. After an announcement to restructure its loans and delay interest payments, which aligned with Q2 earnings showcasing a drop in revenue but improved profits, some investors consider the current dip in Carvana's stock price as an attractive entry point for investing.
Stock Outlook and Recommendation
Considering the technical pattern, improved fundamental aspects, and recent news updates, CVNA maintains a solid potential for upside, which might further intensify over the upcoming week, assuming that the market stays favorable.
The challenges and risks cannot be overlooked, and thus, the company would benefit from keeping a close eye out for further developments. Given its current improvements, potential upside, and considering the mixed sentiment around this stock, it is presently categorized as a 'Hold' for investors - signifying that investors can retain their holdings and potential buyers may wait for additional positive signals or lower prices for an attractive entry point.
Please note that the aforementioned stock price predictions remain for August 2, 2023, and the following week and could experience variations based on market conditions and the company's future updates.
