<\/p>\n
Carvana (CVNA) has spent 2026 frustrating the investors who cheered its record-breaking comeback.<\/p>\n
The stock trades near $74 and is down about 7% for the year, even after the company posted its strongest quarter ever this summer.<\/p>\n
That mismatch between a healthy business and a sluggish share price is what one major Wall Street firm is trying to explain right now.<\/p>\n
Morgan Stanley just walked through its full Carvana outlook again, and it did so with the company’s next earnings report drawing closer.<\/p>\n
Why Morgan Stanley is sticking with a $90 Carvana price target<\/p>\n
Morgan Stanley kept its Overweight rating on Carvana with a 12-month price target of $90, in a research note shared with TheStreet. <\/p>\n
That figure implies roughly 25% gains from current levels.<\/p>\n
The note was led by analyst Daniela Haigian, who covers auto retail for the firm and has carried the most bullish stance on Carvana among major banks through 2026.<\/p>\n
More Automotive Stocks:<\/p>\n
EV maker’s biggest ever recall hits 27,000-plus sedans<\/p>\n
Automakers are quietly changing what’s in your engine<\/p>\n
The failed Honda-Nissan merger just got a second life<\/p>\n
The firm’s confidence rests on three ideas: durable sales growth, free cash flow it says the market underrates, and cost savings that lift profit per car over time.<\/p>\n
Haigian’s team also reiterated that recent reconditioning and financing pressures should fade rather than stick around.<\/p>\n
Carvana stock has lagged in 2026 despite record quarterly results.<\/p>\n
M. Suhail \/ Getty Images<\/p>\n
What the bull case says about Carvana’s sales growth<\/p>\n
Carvana’s Q2 retail units grew 38%. Morgan Stanley notes that third-party data shows second-half growth tracking in the high 30% range, topping its own 34% estimate and Wall Street’s 33% consensus. <\/p>\n
The firm argues growth is limited by supply, not demand, meaning Carvana can sell more cars as it builds up inventory and speeds up its reconditioning centers.<\/p>\n
A demand problem is hard to fix, while a supply problem tends to ease as a company adds capacity.<\/p>\n
Why Carvana’s profit per car keeps investors nervous<\/p>\n
Carvana’s gross profit per unit fell nearly 6% in the second quarter, CNBC reported. Morgan Stanley expects that number to stay volatile in the near term because financing margins and benchmark rates move around each quarter.<\/p>\n
Its longer-term view is that scale and market-share gains from Carvana’s national operation can more than cover flat profit per car.<\/p>\n
Related: Tariffs just pushed Hyundai deeper into America<\/p>\n
The firm expects total gross profit per car to stay roughly flat through 2030, so future profit growth has to come mostly from cutting overhead costs.<\/p>\n
Morgan Stanley estimates Carvana can trim more than $900 in SG&A expenses per retail unit between 2025 and 2030.<\/p>\n
How Carvana’s spending and dealership push fit the thesis<\/p>\n
The company is starting heavier “full buildout” projects at its ADESA auction sites, yet Morgan Stanley still expects total capital spending to stay below 1% of sales.<\/p>\n
That low spending is why the firm believes Carvana can expand past 3 million cars a year while still generating free cash flow to eventually return money to shareholders.<\/p>\n
Carvana is also buying physical new-car dealerships, its seventh such deal, which opens doors into vehicle servicing and parts. The company bought seven Stellantis dealerships for a combined $200 million.<\/p>\n
Morgan Stanley even raises a long-term option where Carvana uses its software and logistics network to manage fleets of self-driving vehicles someday.<\/p>\n
What investors should watch before Carvana’s next report<\/p>\n
Carvana has not set a date for its Q4 earnings, listed only as “TBD” in the research note.<\/p>\n
Before then, the practical checkpoint is whether gross profit per unit holds steady, since that is the number driving the stock’s swings.<\/p>\n
A few things support the bull case, and a few cut against it:<\/p>\n
Points in Carvana’s favor<\/p>\n
Retail unit growth tracking in the high 30% range, ahead of consensus.<\/p>\n
Capital spending under 1% of sales, leaving room for free cash flow.<\/p>\n
Web traffic hit a record 41.6 million visits in July, up 62% year over year.<\/p>\n
Risks to keep in mind<\/p>\n
A weaker job market or tighter lending could slow used-car sales.<\/p>\n
CarMax (KMX) has gained more than 50% in 2026 and is winning back ground.<\/p>\n
Flat profit per car leaves little cushion if costs rise.<\/p>\n
For long-term holders, Morgan Stanley’s message is patience, since payouts sit years out and the stock may stay volatile around each report.<\/p>\n
For anyone considering a new position, the safer move may be waiting for the next earnings report to confirm profit per car has stabilized before adding shares.<\/p>\n
Related: Nissan scrapped a bank it couldn’t afford to build<\/p>\n
#Morgan #Stanley #delivers #bold #Carvana #stock #verdict<\/p>\n","protected":false},"excerpt":{"rendered":"
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