Gordon Haskett has commenced its analysis on CarGurus (CARG, Financial), assigning a Hold rating to the stock. The firm has set a price target of $35 for CARG, indicating a neutral stance on the company's current valuation and future prospects.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for CarGurus Inc (CARG, Financial) is $39.00 with a high estimate of $42.00 and a low estimate of $33.00. The average target implies an upside of 13.70% from the current price of $34.30. More detailed estimate data can be found on the CarGurus Inc (CARG) Forecast page.
Based on the consensus recommendation from 13 brokerage firms, CarGurus Inc's (CARG, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for CarGurus Inc (CARG, Financial) in one year is $23.90, suggesting a downside of 30.32% from the current price of $34.3. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the CarGurus Inc (CARG) Summary page.
CARG Key Business Developments
Release Date: May 08, 2025
- Revenue: $225 million, up 4% year over year.
- Marketplace Revenue: $212 million, up 13% year over year.
- International Revenue Growth: 20% year over year.
- Wholesale Revenue: $8 million, down 52% year over year.
- Product Revenue: $5 million, down 58% year over year.
- Non-GAAP Gross Profit: $200 million, up 14% year over year.
- Non-GAAP Gross Margin: 89%, up approximately 720 basis points year over year.
- Adjusted EBITDA: $66.3 million, up 32% year over year.
- Adjusted EBITDA Margin: 29%, up about 610 basis points year over year.
- Non-GAAP Diluted EPS: $0.46, up 35% year over year.
- Cash and Cash Equivalents: $173 million, a decrease of $131 million from the previous quarter.
- Net Dealer Additions: 734 paying US dealers year over year.
- Guidance for Q2 2025 Revenue: $222 to $242 million, up 2% to 11% year over year.
- Guidance for Q2 2025 Adjusted EBITDA: $71.5 million to $79.5 million, up 29% to 43% year over year.
- Guidance for Q2 2025 Non-GAAP EPS: $0.52 to $0.58.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CarGurus Inc (CARG, Financial) reported a 13% year-over-year growth in marketplace revenue, driven by dealer account growth, subscription tier upgrades, and increased adoption of value-added products.
- International revenue expanded by 20% year-over-year, with significant growth in Canada and the UK, supported by product innovation and increased dealer adoption.
- The company introduced VIN level targeting, enhancing dealers' inventory control and predictive intelligence, leading to a 32% year-over-year growth in highlight adoption.
- CarGurus Inc (CARG) launched a conversational AI experience, cargurus.com/discover, which doubled user engagement time on the site.
- The company achieved a 25% year-over-year growth in monthly active users on its app, contributing to a 20% increase in direct traffic and better lead conversion.
Negative Points
- Wholesale revenue declined by 52% year-over-year, with a 26% sequential decline in digital wholesale segment transaction volumes.
- Product revenue decreased by 58% year-over-year, indicating challenges in maintaining product sales momentum.
- The car offer platform faced structural limitations, lacking flexibility to adapt to rapidly shifting market conditions, impacting transaction volumes.
- Despite operational improvements, rising market volatility has exposed limitations in the car offer business model, necessitating a strategic assessment.
- The company experienced a decrease in cash and cash equivalents by $131 million from the end of the fourth quarter, primarily due to share repurchases and capitalized website development costs.
