Why Carvana Stock Is Surging Today

Carvana (NYSE: CVNA) stock is posting big gains in Thursday's trading thanks to bullish analyst coverage. The company's share price was up 4.8% as of 2:15 p.m. ET and had been up as much as 11.7% earlier in the session.

Before the market opened this morning, Piper Sandler published new coverage on Carvana and upgraded its rating on the stock. Bank of America also issued coverage suggesting that Carvana is unlikely to face big pressures from Amazon's entry into the auto market.

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Piper Sandler thinks Carvana stock has become a bargain

Piper Sandler upgraded its rating on Carvana from neutral to overweight today. While the firm maintained its one-year price target of $225 per share, recent valuation pullbacks have pushed the stock into the buy range. As of this writing, Piper's price target still implies additional upside of roughly 22% for the stock.

Piper's analysts expect that Carvana will see relatively minor headwinds related to new tariffs, and they anticipate that demand will remain relatively consistent even in light of macroeconomic shifts. The firm's analysts expect that the company will be able to continue posting annual sales growth above 20% on a multiyear timeline and record even stronger earnings growth across the stretch.

BofA downplays Amazon's threat to Carvana

Amazon is entering the used-car market, but Bank of America's analysts expect that the move won't destabilize Carvana. They don't see Amazon Auto moving into vehicle delivery or recondition any time soon, and these tenets are central to Carvana's model. In fact, the firm's analysts think that Amazon Auto could actually wind up benefiting Carvana and other online auto retailers over the long term because they see the tech giant helping to normalize online vehicle sales.

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Bank of America is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Bank of America. The Motley Fool has a disclosure policy.