Carvana ( CVNA ) stock gapped higher in early trading Thursday after the company reported a surprise profit for its first quarter.

In the three months ended March 31, Carvana’s revenue increased 17% to $3.1 billion while its earnings per share (EPS) improved to 23 cents from a loss of $1.51 in Q1 2023. These results were driven by its retail units sold increasing 15.9% to 91,878 and its gross profit per unit increasing 49.4% to $6,432 from the year-ago period.

"We delivered our best results in company history, validating our long-held belief that Carvana’s online retail model can drive industry-leading profitability while delivering industry-leading customer experiences," Carvana ( CVNA ) founder and chief executive officer Ernie Garcia said in a statement. "We reached new Q1 milestones for all key profitability metrics while also growing 16% year over year."

The results met or beat analysts’ expectations. According to Yahoo Finance, Wall Street was expecting revenue of $3.1 billion and a per-share loss of 74 cents per share.

For the second quarter, Carvana ( CVNA ) said it expects to achieve a sequential increase in its year-over-year growth rate in retail units and a sequential increase in its adjusted EBITDA.

"With our strong results in Q1 and outlook for Q2, we expect to comfortably deliver on our outlook of year-over-year growth in retail units sold and Adjusted EBITDA for FY 2024," Carvana ( CVNA ) said. 

"With these strong results, significant fundamental margin opportunities ahead, and a nationwide infrastructure that can support multiples of our current scale, we have never been more confident in our opportunity to become the largest and most profitable automotive retailer and to buy and sell millions of cars," Garcia said.

Is Carvana ( CVNA ) a buy, sell or hold?

According to S&P Global Market Intelligence, analysts' average target price for the used car retailer's stock is $67.53, representing implied downside of more than 40% to current levels. Additionally, the consensus recommendation is Hold.

However, these estimates may very well change in the days ahead as analysts revise their price targets following the strong first quarter results.

Financial services firm Wedbush provided an update earlier today, maintaining its Neutral (the equivalent of Hold) rating on the stock, while raising its price target from $80 to $120 – right around where the stock trades now.

"While we were positive into the print, and see continued near-term momentum in fundamentals, positive catalysts will be more limited as we move through the year, keeping us Neutral on CVNA," Wedbush said.