What Happened?
Shares of online new and used car marketplace Cars.com (NYSE:CARS) jumped 4% in the afternoon session after the stock benefited from a positive outlook from Wall Street analysts.
A consensus of analysts who covered the stock rated it a 'Strong Buy'. Their price targets suggested confidence in the company's future performance. For instance, one group of five analysts had an average price target that forecasted a potential 52.59% increase in the stock's value. A separate consensus from seven analysts pointed to an average price target of $19.36. This general view from market experts indicated a belief that the stock would likely outperform the broader market.
After the initial pop the shares cooled down to $12.34, up 3.4% from previous close.
Is now the time to buy Cars.com? Access our full analysis report here.
What Is The Market Telling Us
Cars.com’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 20.3% on the news that the company reported weak fourth-quarter results, with full-year revenue guidance slightly missing expectations and next quarter's revenue guidance falling short of Wall Street's estimates. Revenue for the quarter was essentially flat year-on-year, reflecting a decline in dealer subscription sales. Despite the revenue slowdown, Cars.com narrowly exceeded analysts' EBITDA expectations, indicating a better handle on profits. Overall, this was a weaker quarter, with revenue growth stagnating even as cost controls helped sustain profits.
Cars.com is down 26.7% since the beginning of the year, and at $12.34 per share, it is trading 38.6% below its 52-week high of $20.10 from December 2024. Investors who bought $1,000 worth of Cars.com’s shares 5 years ago would now be looking at an investment worth $1,124.
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