TLDR
- Wedbush Securities upgraded Carvana stock to Outperform from Neutral and raised its price target to $400 from $380
- Carvana shares jumped 7% on Monday despite falling 17% since early September
- Credit rating agencies KBRA, S&P, and Morningstar upgraded multiple classes of Carvana’s auto receivable notes
- Wedbush expects Carvana to surpass CarMax in quarterly used unit volumes six months earlier than forecasted
- Wall Street maintains a Strong Buy consensus rating with an average price target of $433.22
Carvana shares climbed 7% to $331.50 on Monday after Wedbush Securities upgraded the stock. The firm raised its rating to Outperform from Neutral and lifted its price target to $400 from $380.
The upgrade comes as the broader auto market faces pressure. Used-car chain Tricolor Holdings and auto-parts company First Brands both filed for bankruptcy in September. These failures sparked losses at regional banks and raised concerns about systemic credit risks.
Carvana stock has felt the pain. The shares had declined 17% since the start of September, even though the stock is still up 52% for the year.
Wedbush analyst Scott Devitt and his team believe the recent selloff is overdone. They argue investors should view this weakness as a buying opportunity.
Credit Performance Holds Up
The bankruptcy concerns hit Carvana particularly hard because the company packages and sells loans as asset-backed securities. Investors worried the company would get swept into the credit turmoil affecting the broader auto lending sector.
But Wedbush points to evidence that Carvana’s credit performance remains solid. Three major credit rating agencies have upgraded ratings on several classes of Carvana’s auto receivable notes in recent months. KBRA, S&P, and Morningstar all issued positive rating changes.
Delinquency rates for Carvana’s 2022 and 2023 prime securitizations have trended higher than historical averages. However, the newer 2024 securitizations look healthier. The company has expanded its lower-prime and sub-prime loan offerings while maintaining what Wedbush calls “relatively healthy credit performance.”
The analysts note that Carvana’s fundamentals remain unchanged even as the industry backdrop darkens. They believe the market reaction to broader auto sector problems has unfairly punished Carvana’s stock.
Market Share Gains Accelerate
Carvana’s competitive position is strengthening faster than expected. The company is now projected to surpass CarMax in quarterly used unit volumes six months earlier than Wedbush previously forecasted.
CarMax has struggled throughout 2025. The company badly missed earnings expectations in September. Earlier this month, CarMax announced that CEO Bill Nash will be departing.
Wedbush said momentum has shifted favorably toward Carvana in recent weeks. The analysts credit operational and technology improvements for enabling sustainable above-market growth.
Carvana has effectively expanded to older and cheaper vehicles. The company has also broadened its non-prime financing options to meet consumer demand. These moves have helped Carvana capture more market share in the fragmented used car industry.
Wedbush estimates Carvana will capture the top market share as a percentage of vehicle volume in the fourth quarter of 2026. CarMax’s difficulties have cleared additional runway for Carvana to grow.
Auto Delinquencies Remain a Concern
The risk factors in the auto lending market are real. Auto-loan delinquencies are up more than 50% from 2010 levels, according to a recent VantageScore report. Delinquencies are rising even among prime and near-prime borrowers.
Some investors may find the used car industry too risky given these trends. The bankruptcy of Tricolor Holdings and First Brands demonstrated how quickly conditions can deteriorate for weaker players.
Wedbush acknowledges these risks but maintains that Carvana is separating itself from struggling competitors. For investors who can handle volatility, the analysts view the current dip as a buy-low opportunity.
Wall Street broadly supports Carvana. The consensus rating sits at Strong Buy based on 19 analysts. Sixteen analysts rate the stock a Buy, three have Hold ratings, and zero recommend selling.
The average 12-month price target stands at $433.22, implying roughly 31% upside from Friday’s close. Carvana shares closed Friday at $309.14 before Monday’s rally.
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