Key Takeaways
- Bank of America shifted its rating on Carvana (CVNA) from Buy to Neutral while reducing the price target from $400 to $360
- BofA analyst Michael McGovern pointed to surging oil costs and climbing 2-year interest rates as primary risk factors
- Core customers in the lower- and middle-income brackets are experiencing financial pressure
- Gordon Haskett anticipates Q1 revenue could exceed expectations, though March unit growth momentum has slowed
- After soaring 107.5% throughout 2025, shares have retreated 25.6% so far this year
Carvana delivered exceptional returns in 2025, climbing more than 100% to finish at $422.02. However, the momentum has shifted dramatically in 2026, prompting analysts to reconsider their positions.
Michael McGovern, an analyst at Bank of America, revised his stance on CVNA from Buy to Neutral this Monday, simultaneously lowering his target price to $360 from the previous $400. This adjustment stems primarily from changing macroeconomic conditions rather than operational concerns at the company itself.
McGovern had anticipated a more favorable interest rate landscape and seasonal benefits from tax refund spending entering 2026. Unfortunately, neither scenario has materialized as projected.
Meanwhile, a sharp increase in oil prices is creating financial strain for lower- and middle-income households — the demographic that represents Carvana’s primary customer segment. Additionally, two-year interest rates have climbed unexpectedly, potentially compressing Carvana’s profit margins on financing operations.
The tax refund season, typically a catalyst for used vehicle purchases, isn’t providing the expected boost this cycle. Recent data indicates consumers are prioritizing debt repayment over major purchases like automobiles — a subtle but significant behavioral change.
While McGovern praised Carvana’s operational execution and acknowledged its long-term growth prospects remain intact, he noted that the current risk-reward profile appears more balanced than it did at the start of the year.
First Quarter Results May Exceed Forecasts — But Momentum Wanes
Not all analysts are adopting a cautious stance. Robert Mollins from Gordon Haskett, who monitors Carvana’s retail inventory through daily web tracking, believes Q1 revenue will likely surpass Wall Street estimates.
The projected beat stems from strength in both vehicle unit sales and average transaction values. However, Mollins observed that the outperformance margin has contracted compared to the quarter’s earlier weeks.
Significantly, March showed a marked deceleration in unit growth relative to previous months. While growth remained in positive territory, the pace fell short of earlier momentum that had captured investor attention.
Gordon Haskett maintains a Hold rating with a $335 price target, positioned below Monday’s trading levels.
Consensus estimates from analysts predict Q1 revenue of $6.01 billion, representing 42% year-over-year expansion, according to FactSet data. Adjusted earnings per share are projected at $1.53. The company’s earnings release is scheduled for April 29.
Analyst Sentiment Overview
Although BofA lowered its rating, the overall analyst community maintains an optimistic view. CVNA holds a Strong Buy consensus rating, supported by 13 Buy recommendations, four Hold ratings, and zero Sell ratings compiled over the last three months.
The consensus price target stands at $443.38, suggesting approximately 41.5% potential upside from present price levels.
In related automotive retail news, CarMax (KMX) advanced 2% to $42.13 on Monday, whereas AutoNation declined 2.4% to $193.04.
