Key Takeaways
- Bank of America shifted its Carvana (CVNA) rating from Buy to Neutral, lowering the price target from $400 to $360
- Analyst Michael McGovern pointed to surging oil prices and climbing 2-year interest rates as primary risk factors
- Middle- and lower-income shoppers — who form Carvana’s primary customer demographic — face increased financial pressure
- Gordon Haskett anticipates Q1 revenue could exceed expectations, though unit growth momentum slowed in March
- Following a 107.5% surge in 2025, Carvana shares have declined 25.6% year-to-date entering this week
Carvana delivered one of the market’s strongest performances throughout 2025, climbing more than 100% to finish the year at $422.02. However, 2026 has brought a stark reversal, prompting Wall Street firms to recalibrate their expectations.
On Monday, Bank of America analyst Michael McGovern downgraded CVNA shares from Buy to Neutral while reducing his price objective to $360 from the previous $400 target. The adjustment stems primarily from deteriorating macroeconomic conditions rather than concerns about the company’s operational performance.
McGovern had entered 2026 anticipating a more accommodative interest rate landscape and positive momentum from tax refund activity. Those expectations have failed to materialize.
Instead, recent oil price volatility is creating financial strain for lower- and middle-income households that represent a substantial portion of Carvana’s buyer demographic. Additionally, two-year interest rates have risen contrary to forecasts, potentially compressing Carvana’s financing profit margins.
The traditional boost from tax refund season hasn’t delivered its usual impact on used vehicle purchases. Available data indicates a growing number of consumers are directing refunds toward debt reduction instead of vehicle purchases — representing a subtle yet significant behavioral change.
While McGovern praised Carvana’s management team for strong execution and acknowledged the company’s long-term expansion opportunities, he concluded that the current risk/reward profile appears more balanced than it seemed at the start of the year.
First Quarter Results May Surprise, But Growth Is Slowing
Not all analysts have adopted a cautious stance. Gordon Haskett analyst Robert Mollins, who conducts daily tracking of Carvana’s online inventory through web scraping, projects Q1 revenue will exceed consensus estimates.
The anticipated outperformance stems from strength in both unit volumes and average selling prices. However, Mollins noted the margin of outperformance has compressed relative to earlier in the quarter.
More significantly, March unit growth decelerated noticeably compared to January and February. While growth remained positive, the pace fell short of the momentum investors had monitored previously.
Gordon Haskett maintains a Hold rating on CVNA shares with a $335 price objective, positioned below Monday’s opening price.
The Street consensus calls for Q1 revenue of $6.01 billion, representing 42% year-over-year expansion, according to FactSet data. Analysts project adjusted EPS of $1.53. The company is scheduled to report earnings on April 29.
Analyst Sentiment Overview
Notwithstanding the BofA downgrade, Wall Street maintains an overall positive outlook. CVNA holds a Strong Buy consensus rating based on 13 Buy recommendations, four Hold ratings, and zero Sell ratings compiled over the last three months.
The consensus price target stands at $443.38, suggesting approximately 41.5% potential upside from current trading levels.
CarMax (KMX) advanced 2% to $42.13 on Monday, while AutoNation declined 2.4% to $193.04.
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