Morgan Stanley upgrades Carvana, citing investment opportunity

Carvana has received a positive update from Adam Jonas, a notable analyst at Morgan Stanley. He upgraded the company's stock rating from equal weight to overweight. This suggests it might be a good time for investors to buy shares of the online used car marketplace. Jonas raised his price target for Carvana's stock from $260 to $280. This new target indicates a potential increase of more than 31% based on the stock's closing price on Monday. He described this moment as a "unique opportunity" for investors, especially following an 8% decline in the stock earlier in March. The analyst previously had concerns about Carvana's high debt levels. However, he feels more confident now, citing strong cash flow that could help reduce the company’s $5.6 billion in debt. Jonas acknowledged that Carvana operates in a riskier credit space compared to other automotive companies but praised its recent growth and ability to manage debt. Jonas also highlighted Carvana's successful operations. The company has seen significant growth, with four consecutive quarters of double-digit increases in retail vehicle sales last year. Following the upgrade, Carvana's shares rose nearly 4%. Despite this positive outlook, opinions among analysts are mixed. Out of 24 analysts covering Carvana, half recommend buying the stock while the other half suggest holding or selling.