Carvana’s long road back from its near-collapse in 2022 gained another lift this week after Wedbush Securities raised its rating on the company and set a price target well above its recent trading level. The firm upgraded Carvana to Outperform and assigned a $400 target, arguing that the company’s progress over the last several quarters hasn’t been fully reflected in its stock price.

Carvana shares fell about 13% over the past month after weaker guidance from CarMax and growing concerns about stricter auto credit markets. But Wedbush analyst Scott Devitt said those pressures don’t line up with what Carvana itself has been reporting. In his note, Devitt pointed out that the company continues to show steady improvement in unit sales, revenue growth, and operating efficiency… indicators he says matter more than the sector’s broader nervousness.

Wedbush now expects Carvana to generate around $5.2 billion in revenue for the fourth quarter and nearly $19.9 billion for full-year 2025. The firm also believes Carvana has a realistic chance of surpassing CarMax in quarterly used-vehicle units by late 2026. Devitt’s model calls for Carvana to sell about 187,000 cars in that period, compared with CarMax’s 170,000.

The long-term view in the report is even more ambitious. Devitt outlines a scenario in which Carvana could eventually scale to 3 million cars sold annually by 2033. That projection is based on continued gains in operational efficiency, a more optimized logistics network, and the rising comfort consumers have with buying vehicles online.

Recent earnings help explain why analysts are warming to this view. In its latest quarter, Carvana posted record revenue and reported a 44% jump in vehicles sold compared with the previous year. While profit margins came in softer than expected (a detail that led to an immediate pullback in the stock) the strength in demand stood out, especially given the impact of higher interest rates on auto financing.

Despite all this, Wedbush acknowledges that risks remain. Auto loans are still expensive, used-car prices haven’t fully normalized, and the credit environment is tighter than it was a few years ago. Those dynamics could pressure buyers and lenders alike. But Devitt argues that Carvana has built enough operational discipline over the past two years to navigate those challenges more effectively than it could during its earlier expansion phase.

At current levels, Carvana trades at roughly 22 times Wedbush’s 2027 earnings estimate… toward the lower end of where the stock has been valued over the past two years. For Devitt, that makes the recent pullback look more like an opportunity than a warning sign.

If the company continues to grow unit sales, manage costs, and stabilize margins, he believes the stock could move meaningfully higher over the next several years.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.