The renowned used car company Carvana (NYSE:CVNA) stands at a pivotal juncture in 2024, as both investors and analysts closely monitor signals of a potential resurgence following its escape from imminent bankruptcy in 2023. A crucial financial overhaul last year propelled the stock upward, with Carvana revealing a contract to slash its outstanding debt by over $1.2 billion alongside its second-quarter profit announcement. This move underscored Carvana’s commitment to stabilizing its precarious financial standing.
The decision to issue up to $1 billion in stock played a vital role in Carvana’s recovery strategy and was well-received in the market, alleviating concerns of an impending bankruptcy. As the company continues on the path to recovery with its shares soaring by a remarkable 537% year-over-year, let’s delve into what Wall Street anticipates for the future.
Earnings Forecast for Carvana
Despite being a pioneer in the used car industry, Carvana is not entirely out of the woods. While the company exceeded EPS expectations in its latest quarterly report, revenue fell short of consensus forecasts at $2.77 billion. Fiscal year 2024 predictions are not overly optimistic either, with analysts projecting a broader full-year loss of $3.43 per share for fiscal 2024. However, revenue is expected to grow by 4.6% to $11.41 billion, up 4.58% year-over-year. Full-year profitability isn’t anticipated until fiscal 2027.
Although the company’s rising per-share losses signal the necessity for prudent financial management, Carvana’s forward price/sales ratio of 0.44 positions it as reasonably priced for expected growth, representing a significant discount compared to the consumer discretionary sector median of 0.90. The upcoming quarterly earnings report, scheduled in about a month, will shed light on Carvana’s ability to strike a balance in the short term.
Analysts’ Outlook on CVNA Stock
The consensus among analysts regarding CVNA stock remains a “Hold,” a sentiment that has remained relatively stable in recent months. Of the 21 analysts tracking the shares, only 1 recommends a “Strong Buy,” 17 advise to “Hold,” 1 suggests a “Moderate Sell,” and 2 propose a “Strong Sell.” The average price target is $39.31, presenting a modest discount to the current stock price.
Is CVNA Stock a Buy in 2024?
Carvana faces a critical juncture in 2024 as it focuses on cost control. While the company has successfully stabilized its finances and expanded its market exposure by reducing its debt, the road to long-term viability poses a more challenging task post-bankruptcy avoidance.
Carvana (NYSE:CVNA) remains a higher-risk investment heading into 2024. The company’s ability to demonstrate disciplined financials over the long term will likely determine its appeal to cautious analysts and investors. Currently, it is best suited for investors with a more robust risk appetite.
Featured Image: Megapixl
Author Faith Yakubu 
