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Carvana stock jumps on upgrade from JPMorgan

Shares of Carvana (CVNA) soared more than 10% early Monday after JPMorgan analysts upgraded the stock to "Neutral" from "Underweight" and raised their price target from $25 to $40. After meeting with company executives, analysts believe that Carvana can navigate economic uncertainty and is making progress on things like costs and productivity.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

[MUSIC PLAYING]

- Well, shares of Carvana are jumping this morning after JPMorgan analysts raised their outlook for the online used car seller. The analysts boosted their rating to neutral from underweight and lifted its price target to $40 a share from $25.

The analysts saying that it is possible for Carvana to navigate this uncertain macro and used car phase in a way that limits downside. The stock is now trading just above that 12-month target. Carvana is up more than 750% year to date as the company attempts to turn itself around with a debt restructuring plan and by selling new stock.

That's the plus side, Rachelle, but as always with Carvana, we've got to talk about where it's come from. We're looking at $38 a share right now. At its high-- at its high, it was at $380 a share. So you've still got a lot-- a lot more room to run. But you could argue that in many ways, this is I guess some analysts would say kind of closer to fair value given the exuberance and the incredible run up, some would argue the irrational run up that it saw at the peak of the pandemic.

RACHELLE AKUFFO: It's true. I mean, and it has been something of a roller coaster. And Rajat Gupta, who's one of the analysts in that note had previously knocked the wind out of that year to date rally that we had seen from Carvana, saying that the company-- the stock price was disconnected from fundamentals.

But seeing some optimism here, especially as Carvana is leaning into more of its business-to-business aspect, and they also said that they believe that Carvana's approach to retailing used vehicles had given it that multiyear head start. Had to do a little bit of work here on the debt, as you mentioned with the debt restructuring.

You have higher interest rates, higher prices. So interesting to see some optimism here. Perhaps Carvana could make up some of this ground, but certainly at least the stock being lifted on that note this morning.

- Yeah. Rachelle, you know, I'm going to be curious, to be watching the competition in this space. Remember, it was just a few weeks ago that Carvana shares tumbled about 5% on the back of Amazon, making that announcement about that partnership with Hyundai to start selling cars on the platform. So interesting space to watch to say the least.

RACHELLE AKUFFO: Indeed. I'll reserve judgment until I see a few more quarters here. I'm not completely convinced on Carvana's future right now.