Carvana (CVNA) Soars 16.4%: Is Further Upside Left in the Stock?

Carvana (CVNA) shares rallied 16.4% in the last trading session to close at $157.90. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 43.7% loss over the past four weeks.

Yesterday’s stock price jump can be attributed to Morgan Stanley’s bullish research report on the used-vehicle e-retailer. Morgan Stanley reiterated its “Overweight” rating and a price target of $430 on the stock.  Morgan Stanley’s analyst Adam Jonas believes Carvana “has only solidified its moat/competitive advantage in recent years and remains the apex predator in auto retail.”

This company is expected to post quarterly loss of $0.77 per share in its upcoming report, which represents a year-over-year change of -87.8%. Revenues are expected to be $3.47 billion, up 90.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Carvana, the consensus EPS estimate for the quarter has been revised 1.2% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on CVNA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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