Oppenheimer Trims Target Price on CarGurus (CARG) to $38

Core Viewpoint - CarGurus Inc. is considered one of the most undervalued NASDAQ stocks, despite a recent target price cut by Oppenheimer from $40 to $38, maintaining an Outperform rating due to its strong fundamentals and resilience against AI disruption [1]. Group 1: Target Price and Valuation - Oppenheimer reduced its target price on CarGurus by 5.0% to $38, citing the impact of AI disruption on valuation multiples in the tech sector, which has contributed to an approximate 18% decline in CarGurus' stock price year to date [1]. - The firm believes that CarGurus' proprietary valuation data, strong dealer relationships, and AI adoption will protect it from the negative effects of large language model (LLM) disruptions, justifying the overweight rating [1]. Group 2: Product Development and Revenue Guidance - Oppenheimer sees potential upside for CarGurus due to new products and features like PriceVantage, New Car Exposure, CG Discover, and Dealership Mode, which are expected to leverage the company's scale and lead to high incremental margins [2]. - Management's revenue guidance for 2026, released alongside Q4 2025 earnings, indicates that subscription upgrades and increased new-product attach rates will enhance the U.S. quarterly average revenue per subscribing dealer (QARSD) pricing [3]. Group 3: Company Overview - CarGurus Inc. operates as an online automotive platform for buying and selling vehicles, featuring a car listings marketplace and digital retail solutions, including the CarOffer digital wholesale platform [4]. - The company operates through segments such as the customer-facing U.S. Marketplace and the Digital Wholesale division, which provides dealer-to-dealer services and products sold on the CarOffer platform [4].