Core Viewpoint - Morgan Stanley identifies Pinterest as a stock pick due to strong earnings revisions, indicating a favorable environment for stock selection amid rising stock-specific risks [1][2]. Group 1: Stock Selection Environment - Stock-specific risks have increased recently, creating a historically opportunistic environment for stock picking [1]. - Analysts' opinions on company earnings prospects are becoming more varied, contributing to a dispersion of earnings revision breadth [2]. Group 2: Earnings Revisions and Stock Performance - Research indicates that positive earnings revisions can lead to stock gains, with companies that exceed earnings expectations consistently outperforming those that fall short [3]. - Morgan Stanley's stock screen focuses on companies with strong earnings revision momentum, highlighting Pinterest, Reddit, Take-Two Interactive, Burlington Stores, and Carvana as top picks [4]. Group 3: Sector Updates - In the restaurant sector, pricing is restrained while promotional activity is high; the gaming and leisure sector, particularly cruises, is experiencing healthy demand [6]. - Analysts expect improvements in freight-related companies over the next six months [6]. - The technology sector shows continued strength in AI, with challenges in traditional storage and server capacities; within internet companies, agentic AI is gaining traction in e-commerce [6]. - In consumer finance, there is ongoing degradation at the low end of the market, but this trend is not spreading [6].

Core Insights - Carvana Co. shows signs of stabilizing credit performance in the subprime auto market, with slower net loss growth and declining delinquencies, providing cautious reassurance to investors [1][3] Asset-Backed Securities Performance - September data for Carvana's 2025-N1 subprime ABS indicates a moderation in cumulative net loss (CNL) growth, which rose by 44 basis points to 2.29%, a slowdown from the 57-basis-point increase in August [2][3] - The CNL increase is favorable compared to the 85-basis-point average seen in 2022-2023 subprime ABS issuances [4] Delinquency Trends - Positive trends in delinquencies were observed, with 30-day delinquencies decreasing by 44 basis points to 6.64% and 60-day delinquencies declining by three basis points to 2.26% [5] - 90-day delinquencies rose modestly by 13 basis points to 0.95%, consistent with earlier ABS vintages [5] Broader Auto Market Context - Despite investor concerns regarding credit quality, broader trends in the auto portfolio among large-cap banks remain stable, with year-over-year declines in delinquencies and charge-offs [7] Competitive Advantage - Carvana's vertically integrated model supports strong unit economics and industry-leading EBITDA margins, despite holding a modest 1% market share in U.S. used car retail [8] - The company is expected to leverage cost advantages as tariffs impact new car prices, potentially expanding market share and profits [8] Financial Projections - Revenue is projected to increase from $13.67 billion in fiscal 2024 to $18.97 billion in fiscal 2025 and $24.03 billion in fiscal 2026 [9] - Adjusted EBITDA is expected to grow from $1.38 billion in fiscal 2024 to $2.19 billion in fiscal 2025 and $2.92 billion in fiscal 2026, resulting in EV/EBITDA multiples of 58.9x, 37.0x, and 27.8x respectively [9] Company Overview - Carvana, founded in 2012 and based in Tempe, Arizona, is the largest pure-play online used car retailer in the U.S., with a combined retail and wholesale volume of over 1.3 million vehicles in 2024 [10]

Core Viewpoint - Carvana Co. (NYSE:CVNA) is currently experiencing a downtrend, but there are indications that this may soon reverse, presenting a potential buying opportunity as the stock is oversold and at a support level [1][4]. Group 1: Stock Performance - Carvana's stock is trading lower on Tuesday, continuing a downtrend that began on October 1 [1]. - The stock is currently at a support level of $327, which was also a support level in July and August [1]. - The stock remains oversold, indicating that aggressive sellers have pushed it below its typical range, which may attract buyers anticipating a reversal [4][5]. Group 2: Market Dynamics - In the stock market, previous support levels can become significant again, as regretful sellers may repurchase shares when the price returns to these levels [3][4]. - If enough buy orders are placed at the support level, it can create renewed support, potentially leading to upward pressure on the stock [4][5]. Group 3: Technical Indicators - The Commodity Channel Index (CCI) is used to determine if a stock is oversold; when the CCI falls below a certain threshold, it indicates oversold conditions [6][7]. - The recent movement of the CCI suggests that Carvana may be poised for a rally, as it has just fallen below the red line and is showing signs of reversal [7].

Core Insights - Carvana's stock closed at $338.28, reflecting a +2.75% increase from the previous day, outperforming the S&P 500's gain of 1.56% [1] - Over the past month, Carvana's shares have decreased by 8.99%, underperforming the Retail-Wholesale sector's loss of 5.02% and the S&P 500's gain of 0.41% [1] Financial Performance Expectations - Carvana is set to announce its earnings on October 29, 2025, with projected earnings per share (EPS) of $1.3, indicating a 103.13% increase year-over-year [2] - Revenue is expected to reach $4.94 billion, reflecting a 35.06% increase compared to the same quarter last year [2] - For the entire fiscal year, earnings are projected at $5.15 per share and revenue at $18.94 billion, representing increases of +223.9% and +38.54% respectively from the prior year [3] Analyst Sentiment - Recent changes to analyst estimates for Carvana suggest positive sentiment regarding the company's business operations and profit generation capabilities [4] - The Zacks Rank system, which assesses estimate changes, currently rates Carvana at 3 (Hold), with a recent 1.58% upward adjustment in the EPS estimate over the last 30 days [6] Valuation Metrics - Carvana's Forward P/E ratio stands at 63.99, significantly higher than the industry average of 20.99, indicating that the stock is trading at a premium [7] - The company has a PEG ratio of 1.07, compared to the Internet - Commerce industry's average PEG ratio of 1.43, suggesting a favorable growth outlook relative to its valuation [8] Industry Ranking - The Internet - Commerce industry, which includes Carvana, ranks in the top 22% of all industries, with a Zacks Industry Rank of 53 [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1, highlighting the potential for growth within Carvana's industry [9]

Core Insights - Carvana Co. is revolutionizing the used car purchasing process by allowing customers to pick up vehicles from a vending machine-like structure, showcasing an innovative approach in the automotive retail industry [1]. Company Overview - Carvana Co. trades on the NYSE under the ticker CVNA and is recognized for its disruptive business model in the used car market [1]. Analyst Background - Nabeel Bukhari, a law graduate with expertise in corporate law and self-taught financial analysis, provides a unique perspective on business dynamics, enhancing the understanding of Carvana's market position [1].

Group 1 - Carvana is experiencing solid execution with a recovery in 2023 and 2024, achieving record GPU of approximately $7,580 per unit [1] - The company has highly efficient inventory management, with turnover at an all-time high [1] - The macroeconomic environment includes potential interest rate changes that could impact the automotive retail sector [1]

Core Viewpoint - Carvana is navigating scrutiny over its subprime financing but is well-positioned to manage potential losses due to rising used-car prices and resilient securitization structures, maintaining a growth trajectory [1] Financing Exposure - The bankruptcy of subprime lender Tricolor and CarMax's increased reserves have heightened interest in Carvana's financing exposure [2] - Investors are closely examining Carvana's auto loan performance, particularly delinquency and cumulative net loss rates [3] Securitization Analysis - BTIG's analysis indicates that none of Carvana's 14 subprime asset-backed securities (ABS) issuances since 2019 are at risk of impairment, despite cumulative net losses exceeding initial projections by over 500 basis points [4] - Future excess spread income can provide additional credit enhancement to securitizations, mitigating principal loss risks [5] Stress Cases and Resilience - BTIG outlined three stress scenarios indicating resilience, suggesting that even if equity tranches incur losses, their internal rate of return could remain positive [6] - Market access is likely intact even if impairments occur, as other issuers have continued securitizations despite similar credit events [6] Financial Projections - An estimated 13% hit to adjusted EBITDA from increased credit enhancement would still leave Carvana's margins approximately double those of traditional dealers [7] - BTIG projects fiscal year 2025 revenue at $18.97 billion, up from $13.67 billion in fiscal year 2024, and expects further growth to $24.03 billion in fiscal year 2026 [9] Business Model and Market Position - Carvana's vertically integrated model supports growth and profitability despite holding only a 1% share of the used car market [8] - Tariff-driven pricing benefits and expansion into franchise and adjacent markets could enhance Carvana's market reach [8]

Core Insights - Carvana Co. (NYSE: CVNA) has demonstrated resilience against cash flow pressures, emerging as a stronger business than previously anticipated [1]. Company Analysis - The initial expectation was that Carvana would struggle with cash flow issues, but the company has proven this assumption wrong by strengthening its business model [1]. Analyst Background - Dilantha De Silva, an experienced equity analyst with over 10 years in the investment industry, has a focus on small-cap stocks often overlooked by Wall Street [1].

Core Insights - Financial giants are showing bullish sentiment towards Carvana, with 56% of traders being bullish and 30% bearish, indicating a strong interest in the stock's potential [1] - Significant investors are targeting a price range for Carvana between $90.0 and $600.0 over the past three months, suggesting high volatility and potential for growth [2] - Analysts have provided varying ratings on Carvana, with an average target price of $446.67, reflecting a generally positive outlook despite some mixed ratings [11][12] Options Activity - A total of 181 unusual trades were identified for Carvana, with 117 calls valued at $9,083,534 and 64 puts valued at $4,316,587, indicating a preference for bullish positions [1] - The analysis of volume and open interest reveals significant liquidity and investor interest in Carvana's options, particularly within the strike price range of $90.0 to $600.0 over the last 30 days [3][4] - Notable options trades include bullish sweeps for calls with strike prices ranging from $172.75 to $247.6, alongside bearish sweeps for puts at lower strike prices, highlighting diverse trading strategies [8] Company Overview - Carvana operates as an e-commerce platform for buying and selling used cars, generating revenue primarily from retail vehicle sales, wholesale vehicle sales, and additional services such as financing and insurance [9] - The company's business model is heavily reliant on retail vehicle unit sales, which constitute the majority of its revenue, while also capturing additional revenue streams from related services [9] Market Performance - Carvana's stock price is currently at $362.0, reflecting a slight increase of 0.3%, with a trading volume of 1,767,970, indicating active market participation [14] - The upcoming earnings report is anticipated in 20 days, which could further influence market sentiment and stock performance [14]

Core Insights - The third quarter performance of the selected stocks was strong, with 14 out of 18 stocks finishing in positive territory, and 12 of those achieving double-digit gains [2][3] - Notably, four stocks have doubled in value year-to-date, while 13 stocks have recorded double-digit gains [2] - The report provides a ranking of the 18 stocks based on their year-to-date returns and offers insights into their outlook for the fourth quarter [2] Stock Performance Summary - **Beam Therapeutics (BEAM)**: Q3 gain of 42.68%, YTD return of 4.03% [3] - **Bloom Energy (BE)**: Exceptional Q3 gain of 253.55%, YTD return of 309.14% [3] - **Boeing (BA)**: Q3 gain of 3.01%, YTD return of 23.12% [3] - **Carvana (CVNA)**: Q3 gain of 11.95%, YTD return of 90.70% [3] - **CF Industries (CF)**: Q3 loss of 2.50%, YTD return of 6.03% [3] - **Coinbase Global (COIN)**: Q3 loss of 3.71%, YTD return of 50.98% [3] - **Dell Technologies (DELL)**: Q3 gain of 15.64%, YTD return of 26.09% [3] - **Deutsche Bank (DB)**: Q3 gain of 20.94%, YTD return of 108.91% [3] - **Ezcorp (EZPW)**: Q3 gain of 37.18%, YTD return of 49.39% [3] - **LendingClub (LC)**: Q3 gain of 26.27%, YTD return of -6.38% [3] - **Nebius Group (NBIS)**: Q3 gain of 102.91%, YTD return of 356.10% [3] - **Opera (OPRA)**: Q3 gain of 9.21%, YTD return of -2.85% [3] - **Rocket Lab (RKLB)**: Q3 gain of 33.94%, YTD return of 108.99% [3] - **Roku (ROKU)**: Q3 gain of 13.93%, YTD return of 39.22% [3] - **Sea (SE)**: Q3 gain of 11.75%, YTD return of 73.99% [3] - **SEI Investments (SEIC)**: Q3 loss of 5.58%, YTD return of 3.18% [3] - **SoFi Technologies (SOFI)**: Q3 gain of 45.09%, YTD return of 65.62% [3] - **STMicroelectronics NV (STM)**: Q3 loss of 7.07%, YTD return of 16.54% [3] - **Total Gain**: Cumulative YTD return of 1322.80% across all stocks [3] Notable Stock Insights - **Nebius Group NV (NBIS)**: Strong performance in the AI sector, with 10% of the stock's float sold short [3] - **Bloom Energy Inc (BE)**: Benefiting from the data center boom, with a significant Q3 gain [4] - **Rocket Lab Corp (RKLB)**: Showing bullish potential despite a recent stock sale [5] - **Deutsche Bank AG (DB)**: A solid performer in the banking sector, demonstrating value investing characteristics [5] - **Carvana Co (CVNA)**: Positive momentum following earnings, with decreasing short interest [6] - **Sea Limited (SE)**: Consistent performance with three consecutive profitable quarters [6] - **SoFi Technologies (SOFI)**: Testing support levels, with potential for further gains [7] - **Coinbase Global Inc (COIN)**: Continues to face skepticism from analysts despite its crypto focus [8] - **Ezcorp Inc (EZPW)**: Positive bounce off its 200-day moving average, indicating potential growth [8] - **Roku Inc (ROKU)**: Reinventing itself after being oversold [9] - **Dell Technologies Inc (DELL)**: Monitoring external factors like chip imports and tariffs [9] - **Boeing Co (BA)**: Currently in a channel of higher highs, indicating potential for recovery [9] - **STMicroelectronics NV (STM)**: Struggling to recover from a post-earnings gap [10] - **CF Industries (CF)**: Upcoming earnings report to be closely watched [10] - **Beam Therapeutics Inc (BEAM)**: Trading at its highest level since March, showing signs of recovery [10] - **SEI Investments Co (SEIC)**: Facing downward pressure, testing its 200-day moving average [10] - **Opera Ltd (OPRA)**: Struggling to capitalize on previous positive ratings [11] - **LendingClub Corp (LC)**: Despite being the worst performer, still showing resilience with a recent quarterly gain [11] Market Sentiment - Several stocks, including BEAM, COIN, DELL, NBIS, ROKU, and STM, have high Relative Strength Indexes, indicating potential overbought conditions [12] - Despite the strong performance, there are still bullish cases to be made for all 18 stocks listed [12]