12:34 PM EDT, 10/31/2024 (MT Newswires) -- Carvana ( CVNA ) had "another strong quarter" as its Q3 results met expectations for revenue and exceeded expectations for adjusted earnings before interest, taxes, depreciation, and amortization, Wedbush Securities said in a note Thursday.

Analysts, including Seth Basham, said that the company projected a sequential increase in year-over-year retail unit sales growth, which may indicate a seasonal decline in sales. However, it projected 2024 adjusted EBITDA to be "significantly above" its previous range of $1 billion to $1.2 billion.

The analysts said the biggest positive surprise in Q3 came from other gross profit per unit, or GPU, which reached $2,945, exceeding their estimate of $2,435 and the consensus estimate of $2,481. The quarter-over-quarter improvement was driven by temporary factors, including selling more loans than originated and falling benchmark interest rates.

"Even with some transitory benefits to other GPU, profitability was very strong and raises the bar even higher moving forward," the analysts said.

Carvana ( CVNA ) also exceeded expectations for wholesale gross profit due to a better wholesale-to-retail ratio and higher profit per unit, while selling, general, and administrative expenses were managed effectively, the analysts added.

"All of that said, we remain sidelined primarily due to valuation," the analysts said, adding that they have updated their EBITDA estimate of $1.8 billion for 2025 and a $250 share price in the aftermarket and Carvana ( CVNA ) is trading at around 32 times that EBITDA. "Valuation is less challenging if one believes the company can maintain rapid 25% plus growth well into the future, but we do not underwrite that scenario at this time."

Wedbush maintained its neutral rating on Carvana's ( CVNA ) stock and raised its price target to $250 from $175.

Shares of Carvana ( CVNA ) surged past 23% in recent trading.

Price: 255.71, Change: +48.40, Percent Change: +23.35