Buy Rating Affirmed for CarGurus on Strong Dealer Business and Promising CarOffer Growth Potential

CarGurus (CARG – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Chris Pierce from Needham reiterated a Buy rating on the stock and has a $25.00 price target.

Chris Pierce has given his Buy rating due to a combination of factors that suggest a strong outlook for CarGurus (CARG). The company’s dealer marketplace business is exhibiting robust health, evidenced by a consistent dealer count and a significant uptick in quarterly average revenue per subscribing dealer (QARSD). The stability and growth within this segment provide a solid foundation for the company’s financials.
Furthermore, CarGurus’ wholesale business, CarOffer, is identified as a critical element for future growth and the potential to command a higher market multiple. Although currently undergoing a phase of redevelopment, the anticipated integration of CARG’s extensive retail pricing and inventory data is expected to enhance dealers’ wholesale decision-making. This represents an exciting opportunity for market expansion and product bundling that could benefit CARG. Pierce’s increased price target of $25 aligns with a 10x multiple of the projected adjusted EBITDA for FY25, which is consistent with the growth trajectory outlined in their financial models through to FY26.

According to TipRanks, Pierce is an analyst with an average return of -20.3% and a 31.37% success rate. Pierce covers the Consumer Cyclical sector, focusing on stocks such as Blue Bird, Rivian Automotive, and CarMax.

In another report released yesterday, BTIG also maintained a Buy rating on the stock with a $28.00 price target.

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CarGurus (CARG) Company Description:

Cargurus, Inc. engages in the provision of online auto shopping. It offers proprietary technology, search algorithms, and innovative data analytics to analyze new and used car listings. The firm operates through the following segments: United States and International. The United States segment derives revenues from marketplace subscriptions, advertising services, and other revenues from customers within the United States. The International segment includes the revenues from marketplace subscriptions, advertising services, and other revenues from customers outside of the United States. The company was founded by Langley Steinert in 2006 and is headquartered in Cambridge, MA.