ACV Auctions Inc. (NASDAQ:ACVA) shares rose more than 2% intra-day today after Needham analysts raised their price target on the stock to $28 from $26, maintaining a Buy rating and naming the company as a top pick on the Needham Conviction List for the third consecutive year. The updated outlook reflects ACV’s strong position as a leader in dealer-to-dealer auctions and its promising growth trajectory.

According to the analysts, ACV is positioned for sustained expansion, benefiting from improving market conditions and the gradual normalization of dealer behavior. The company’s growth is further supported by plans to expand its total addressable market (TAM) into commercial auction supply, unlocking additional revenue opportunities.

The analysts raised fourth-quarter estimates due to higher year-over-year auction conversion rates, driven by improving retail demand amidst tight used vehicle supply. Similar market dynamics are expected to persist into fiscal 2025, prompting increased unit and revenue projections. While incremental margins may face short-term pressure as ACV invests in building its commercial pipeline, these margins are projected to grow significantly in fiscal 2026 as the company solidifies its leadership in dealer-to-dealer auctions and gains market share among commercial sellers.