Sign InCVNA stock expected to rise after positive news and earnings performance
Summary
The technical and fundamental analysis of Carvana Co. indicates a positive outlook for the stock, with recent positive news and external factors suggesting a potential increase in the stock price in the next trading day on July 27, 2023, and a persistent positive outlook in the following week; however, concerns over the company's losses and overbought Relative Strength Index (RSI) suggest classifying it as a 'Hold' for now until the company shows sustained profitability or success in its strategic decisions. (Analysis conducted on July 26, 2023)
Introduction
Carvana Co. (Ticker: CVNA) is a NYSE listed company specializing in the online marketplace for buying and selling used cars. The stock's last closing price was 43.75 USD, with a slight fall of 0.82% on July 26, 2023.
Technical Analysis
The technical analysis revealed that CVNA is currently traded at a price just 25.48% and 4.68% off the 50-day and 200-day moving averages of 24.31 USD and 13.00 USD, respectively. The stock has a daily trading volume of 16.83 million shares, significantly lower than the average trading volume of 31.90 million shares. This discrepancy suggests slightly reduced investor interest.
The Relative Strength Index (RSI14) stands at 70, indicating that the stock is in an overbought territory and may experience a pullback. Additionally, the Moving Average Convergence Divergence (MACD) over the previous three months stands at 6.61, suggesting a positive momentum.
Fundamental Analysis
CVNA has a market capitalization of approximately 7.77 billion USD, with 177.60 million shares outstanding. The Price to Earnings (PE) ratio is currently -10.46, suggesting the company is not generating profits. The negative EPS of -4.18 also indicates a loss per share in the fiscal period.
Most recent news indicates that CVNA has undertaken debt restructuring and has plans to present at the upcoming J.P. Morgan Automotive Conference. Furthermore, it has managed to beat earnings expectations, further stoking investor interest and potentially having massive implications for investors.
Analyst Targets
The financial forecast provided by analysts suggests that the median target price stands at 73 USD, consensus price at 113.21 USD, with a high and low estimate of 470 USD and 5 USD respectively. This indicates a bullish outlook among analysts with the high target representing an upside of 974.06% from the last close price, and the median target representing a potential gain of 67.09%.
DCF Analysis
The Discounted Cash Flow (DCF) analysis provides a value of 48.05 USD, which is slightly higher than the current price.
Prediction
Considering the technical and fundamental factors, it is expected that the stock price may increase in the next trading day on July 27, 2023, primarily driven by recent positive news and external factors. Additionally, the positive outlook should persist in the following week as investors react to the company’s recent strategic decisions and favourable market sentiment.
Evaluation
In conclusion, CVNA's recent strategic decisions and above expectations earnings performance, coupled with a bullish median target by analysts, tend to paint a positive outlook for the company. However, the company's losses and overbought RSI might raise concerns for potential investors. Hence, it is advisable to classify CVNA as a 'Hold' for the time being, until the firm shows sustained profitability or success in its strategic decisions.
