Carvana Stock Surges After Rare Upgrade

CVNA has had quite the year so far, up over 750%

Deputy Editor
Dec 4, 2023 at 10:44 AM
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The shares of Carvana Co (NYSE:CVNA) are careening higher today, after J.P. Morgan Securities upgraded the used-car retailer to "neutral" from "underweight," with a price-target hike to $40 from $25. The firm cited a number of factors in its note, including the company's recent acquisition of ADESA's U.S. physical auction business. 

At last glance, CVNA was up 14.5% at $40.35, breaking above recent pressure at the $35 level as well as its 120-day moving average. Having begun the year in penny stock territory, Carvana stock is outperforming with a hefty 752% year-to-date lead. 

The upgrade is a shocker, considering only one of the 21 brokerages in coverage maintain a "buy" rating on the stock, while its 12-month consensus price target of $33.94 is now a 16.8% discount of its current perch. If the equity continues to outperform into 2024, upgrades could soon follow. 

An unwinding of pessimism could provide CVNA further tailwinds, as short interest represents 30.9% of the stock's available float. Plus, the stock's 50-day put/call volume ratio of 1.12 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 98% of readings from the past year. 

Now looks like a good time to weigh in on Carvana stock with options, too. The equity's Schaeffer's Volatility Index (SVI) of 93% ranks in the low 6th percentile of its annual range, meaning options traders are pricing in lower volatility expectations than usual. The stock has tended to exceed these volatility expectations on an annual basis as well, per its Schaeffer's Volatility Scorecard (SVS) of 87 out of 100. 

 

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