Carvana Stock Is Rising. Ignore the Struggling Car Market, Say Analysts.

Carvana stock has fallen 17% since the start of September as of Friday. (Mark Ralston/AFP via Getty Images)

Key Points

• Wedbush Securities upgrade Carvana stock to Outperform from Neutral and raises its price target to $400 from $380.
• Carvana shares rise Monday. Coming into Monday, the stock has fallen 17% since early September.
• Wedbush expects Carvana to surpass CarMax in quarterly used unit volumes six months earlier than previously forecasted.

Theused car market doesn’t exactly look healthy, but that shouldn’t spook Carvana shareholders, according to Wedbush Securities.

on Monday, the firm’s analysts upgraded the stock to Outperform from Neutral and lifted its price target to $400 from $380. Carvana can weather the issues facing its peers to become “the new used car king,” the firm said in a research note.

Shares climbed 7.5% to $333.26. The stock is up 52% this year, but is down 17% since the start of September.

Wall Street has had questions about both Carvana’s lending and sales businesses. Used-car chain Tricolor Holdings and auto-parts company First Brands both filed for bankruptcy in September, leading to losses at multiple regional banks and fears of systemic credit risks. Those worries helped spark a series of big stock pullbacks for Carvana, which also packages and sells loans as asset-backed securities.

On the sales side, CarMax , Carvana’s closest competitor, has had a brutal 2025. CarMax badly missed earnings expectations in September, then announced the impending departure of current CEO Bill Nash earlier this month.

Carvana’s fundamentals, however, remain unchanged even as the industry backdrop darkens, Wedbush said.

“We believe the recent pullback in shares is overdone,” wrote the analyst team led by Scott Devitt. “Investors should take advantage of this period of relative weakness.”

First, the credit market fears. Investor sentiment around Carvana has mirrored the broader market, Wedbush said. But in isolation the company has been able to maintain “relatively healthy credit performance” while expanding its lower-prime and sub-prime loan offerings.

Credit credit-rating firms KBRA, S&P, and Morningstar all have upgraded ratings on several classes of Carvana auto receivable notes in recent months, Wedbush pointed out. And while delinquency rates for the company’s 2022 and 2023 prime securitizations have trended higher than historical averages, newer securitizations look healthier.

As for sales, Carvana looks set to capture the top market share in the highly fragmented used car industry as a share of vehicle volume in the fourth quarter of 2026, Wedbush estimated. Part of that is down to CarMax’s struggles.

“Momentum has shifted more favorably towards Carvana in recent weeks, with current estimates suggesting Carvana will surpass CarMax’s quarterly used unit volumes six months earlier than initially forecasted,” Devitt’s team wrote.

Operational and technology improvements have enabled sustainable above-market growth, Wedbush added. Carvana also has effectively expanded to older and cheaper vehicles and non-prime financing to meet consumer demand.

Some investors may still find the used car industry too risky for their blood. Auto-loan delinquencies are up more than 50% from 2010, VantageScore found in a report last month, with delinquencies on the rise even among prime and near-prime borrowers.

If they can stomach the risk, though, investors have a new buy-low candidate to consider.

Write to Nate Wolf at nate.wolf@barrons.com