Cars.com Stock Upgraded to "Overweight" by JPMorgan

Shares of Cars.com (CARS) jumped 4.5% after JPMorgan upgraded the stock to "Overweight" from "Neutral", citing a valuation analysis. The investment bank kept its price target at $14.00. The upgrade boosted investor confidence in the company's prospects, but the shares cooled down to $12.92. Cars.com's shares have had 15 moves greater than 5% over the last year and are down 23.3% since the beginning of the year.

Shares of Cars.com (CARS) surged 4.5% on Thursday, July 17, after JPMorgan Chase & Co. upgraded the stock to "Overweight" from "Neutral." The investment bank maintained its price target of $14.00 [1]. The upgrade came as a result of a valuation analysis, boosting investor confidence in the company's prospects. However, the stock cooled down to $12.92 by the end of the trading day.

The upgrade was based on JPMorgan's enterprise value to EBITDA multiple of approximately 5.5x on its 2026 EBITDA estimate for the online automotive marketplace. This valuation represents a roughly 40% discount relative to the target multiple of approximately 9.5x for competitor CarGurus (NASDAQ:CARG) [3]. The discount reflects Cars.com's relatively slower growth and margin expansion in recent years compared to its peer.

JPMorgan noted that the typical valuation gap between first and second-ranked players in alternative e-commerce and digital marketplace verticals was also considered in determining the appropriate multiple. The investment bank also highlighted Cars.com's significant strides in developing new products and solutions that integrate them into dealers' operational workflows, including market intelligence, consumer sourcing functionalities, D2D wholesale, and online retailing. These advancements are seen as boding well for the retention of dealer customers, even amid a volatile industry backdrop [2].

Cars.com's shares have had 15 moves greater than 5% over the last year and are down 23.3% since the beginning of the year. The company's current consensus rating is "Moderate Buy" with a consensus price target of $18.30 [1]. The company's last earnings report showed a quarterly EPS of $0.37, missing the consensus estimate of $0.39 by ($0.02). The company had revenue of $179.02 million for the quarter, compared to analyst estimates of $179.82 million [1].

References:
[1] https://www.marketbeat.com/instant-alerts/jpmorgan-chase-co-upgrades-carscom-nysecars-to-overweight-2025-07-17/
[2] https://www.benzinga.com/analyst-stock-ratings/analyst-color/25/07/46473998/analyst-revs-up-cars-com-hits-the-brakes-on-3-others
[3] https://www.investing.com/news/analyst-ratings/carscom-stock-rating-upgraded-to-overweight-by-jpmorgan-on-valuation-93CH-4138836