Morgan Stanley Upgrades Carvana to Overweight, Sees Over 30% Upside After Pullback

Morgan Stanley upgraded Carvana (NYSE:CVNA) from Equalweight to Overweight, lifting its price target to $280 from $260, citing the stock’s recent decline as a compelling entry point into a leader in online auto retail and fleet logistics.

The analysts highlighted that a sharp pullback in Carvana’s share price now presents an attractive risk-reward profile, with more than 30% upside to the new price target and potential gains of up to 90% in a bullish scenario that sees shares reaching $400.

Morgan Stanley previously upgraded the stock to Equalweight in November, recognizing Carvana’s significant improvement in fundamentals but cautioning about risks tied to growth sustainability, profit margins, and its leveraged balance sheet, particularly amid uncertainty in the U.S. auto credit and asset-backed securities (ABS) market.

Since then, Carvana has made notable progress, delivering profitable growth while actively addressing its debt load. Despite its customer base being more exposed to subprime auto credit than peers, the company continues to show solid operational execution.