Carvana stock received both a downgrade and a target price increase this morning
The shares of Carvana Co (NYSE: CVNA) are down 1.6% to $ 308.42 this morning after JP Morgan Securities downgraded the stock from overweight to neutral. The analyst in coverage noted a less favorable risk / return ratio for the short term and that it is time for the stock to cool off after its peers outperformed. However, the company continues to believe that Carvana offers long-term growth opportunities and that it has earned recognition for its strong multi-year sales and gross profit growth. Jefferies appeared to agree to a more favorable long-term outlook and raised the security’s price target from $ 375 to $ 400.
Carvana stock was trying to rebound towards its all-time high of $ 323.39 on March 2nd just yesterday. Although the security ultimately failed to reach that level, it still achieved its fifth straight win and the second-highest closing price on record. The stock is also supported by its 20-day moving average and is up an impressive 140.6% year over year.
Analysts were overwhelmingly bullish on the stock today, with 17 of the 22 stocks in question rated “Buy” or better while the remaining five said “Hold”. Plus, it looks like the stock could benefit from a short squeeze, as the 17.28 million stocks sold short account for a whopping 22.1% of the stock’s available float, or purchasing power pent up over two weeks.
The options reflect the optimism of analysts, with a strong appetite for calls. This corresponds to CVNA’s 50-day call / put volume ratio of 1.23 on the International Securities Exchange (ISE), the Cboe Options Exchange (CBOE), and the NASDAQ OMX PHLX (PHLX), which are in the 88th percentile of their annual bandwidth lies. This indicates that long calls are being answered faster than usual.
CVNA options are currently a bargain. The Schaeffer’s Volatility Index (SVI) of 47% is in the extremely low 5th percentile of the values measured over the past 12 months. In other words, option players are currently pricing in low volatility expectations.