CarGurus Price Target Boosted to $40 at JPMorgan

CarGurus (CARG), a leading online automotive marketplace, has seen its price target raised to $40 from $36 at JPMorgan, reflecting analysts' confidence in the company's strong financial performance and growth prospects. The upgrade comes on the heels of CarGurus' better-than-expected third-quarter financial results and positive guidance for the fourth quarter and full-year 2024.

CarGurus reported earnings of $0.45 per share and revenue of $231.358 million in the third quarter, surpassing analyst estimates of $0.42 per share and $223.537 million, respectively. The company's Marketplace revenue grew 15% year-over-year, accelerating from the previous quarter, while non-GAAP consolidated adjusted EBITDA increased 33% to $64.9 million. CarGurus' strong financial performance was driven by its customer-centric focus and ability to capture greater wallet share, as highlighted by CEO Jason Trevisan.

JPMorgan analyst Rajat Gupta raised CarGurus' price target to $40, citing the company's accelerating Marketplace revenue growth and improved operating efficiencies. Gupta likely considers CarGurus' ability to deliver actionable insights, tools, and functionalities that drive adoption, engagement, and retention across its platform as key factors in his positive outlook.
CarGurus' guidance for the fourth quarter and full-year 2024 also contributed to the analyst's bullish stance. The company projects total revenue of $885 million to $905 million and non-GAAP EPS of $1.67 to $1.73, surpassing analyst estimates. This guidance indicates strong growth momentum and solid financial performance, further supporting Gupta's price target revision.

CarGurus' strategic positioning and market trends have also played a role in JPMorgan's decision to raise its price target. The company's focus on the used car market, which is less cyclical than new cars, has insulated it from economic downturns. Additionally, the increasing consumer preference for online car shopping, accelerated by the COVID-19 pandemic, has driven growth in CarGurus' marketplace revenue.

In conclusion, CarGurus' strong financial performance, accelerating Marketplace revenue growth, and improved operating efficiencies have led JPMorgan to raise its price target to $40. The company's customer-centric focus, strategic positioning, and favorable market trends support the analyst's bullish outlook. As CarGurus continues to execute its business strategy and deliver value to dealer partners, investors can expect the company to maintain its growth trajectory and create long-term shareholder value.