RBC Capital has trimmed its target price for Carvana Co. (NYSE: CVNA) to $440 from $500 but left its Outperform rating intact. The research note frames the revision around a fourth-quarter operational dynamic in which Carvana prioritized unit growth at the expense of per-unit economics, resulting in a gross profit per unit shortfall relative to expectations.
At the time of RBC’s update, Carvana shares were quoted at $361.53 and the company carried a market capitalization of $79.2 billion. RBC noted that the current share price sits close to the InvestingPro Fair Value estimate, indicating the market may be broadly aligned with prevailing analyst views despite the lowered target.
RBC characterized the quarter as challenging. The company delivered units in line with projections, but the gross profit per unit fell short after Carvana "gave more economics back to customers than anticipated" to support volume growth. The firm also flagged a decline in some reconditioning efficiencies, a factor that weighed on per-unit profitability.
The analyst note adds that Carvana passed along benefits from lower interest rates and transport savings, while carrying underutilized capacity intended to support expanded supply. Those dynamics, RBC wrote, are compressing gross profit per unit. The firm also observed a strategic tilt toward growth over the more balanced approach of growth plus margin expansion that had characterized the company in recent years.
Even with the operational tradeoffs, Carvana’s top-line and margin metrics remain notable. Over the trailing twelve months the company posted revenue growth of 48.63%, and its gross profit margin stood at 20.63%. RBC expects a reset in 2026 projections from the current point, with elasticity to rates, user experience and potentially price singled out as levers for achieving stronger growth in that year.
The research note anticipates fixed cost leverage will help offset the headwinds to gross profit per unit, supporting robust bottom-line expansion over time. Market consensus appears to share a constructive view: analysts’ aggregate recommendation is 1.88 on the scale reported, equivalent to a Buy, and consensus forecasts show revenue growth of 46% for fiscal year 2026.
RBC also commented on a recent short report that has drawn market attention. The firm said the lack of a need to address the report in granular detail on a public call generally does not favor short sellers. RBC suggested that incorrect VIN numbers may have led to misidentification of lienholders, a point on which the short report’s conclusion depends.
Third-party financial health metrics cited in the note depict Carvana as resilient. On InvestingPro, the company carries a financial health score of "GOOD," with an Altman Z-Score of 9.82 and a Piotroski Score of 8—signals the firm interprets as consistent with solid financial stability amid the operational issues described.
Looking ahead, Carvana is scheduled to release its quarterly earnings next week. The impending report arrives against a backdrop of legal challenges and sustained pressure from short sellers, factors RBC and others say are contributing to elevated investor attention and some market anxiety.
Other sell-side activity highlights the range of analyst convictions. JPMorgan continues to rate Carvana as Overweight. BTIG kept its Buy stance and raised its target to $535 from $450, citing encouraging consumer survey data on online car purchasing. Deutsche Bank increased its price target to a Street-high $600, pointing to possible upside from macro policy moves and the aging vehicle fleet in the United States. These upward revisions and reiterated positive ratings underline that multiple analysts still see meaningful growth potential for the company despite the recent operational set-backs.
The note also reiterated a market concern flagged repeatedly by investors: the relationship between Carvana and DriveTime, a private firm owned by Ernie Garcia II, who is both Carvana’s controlling shareholder and the father of the company’s Co-founder and CEO. The analyst commentary did not introduce new facts on that relationship but acknowledged it as a point of scrutiny in the current market environment.
Bottom line: RBC’s reduction in Carvana’s price target reflects a tradeoff the company made between accelerating unit sales and protecting per-unit margins during the fourth quarter. At the same time, revenue momentum and margin levels remain strong, and several other brokerage shops continue to express positive views, producing a spectrum of price targets and supportive analyst ratings.