Cars.com Stock Snags Another Price Target Cut As Sell-Side Wary About Execution: Retail Stays Confident

UBS expressed concerns over the guidance's back-end nature, adding that the company needs to execute to regain investor confidence.

Shares of automotive marketplace Cars.com, Inc. (CARS) fell sharply on Thursday following a double miss for the fourth quarter of the fiscal year 2024. Following the quarterly print, the stock received a price target cut from investment bank UBS.

UBS analysts reduced Cars.com stock price target to $15 from $20 and maintained a ‘Neutral’ rating, TheFly reported. The updated price target suggests scope for roughly 14% upside potential from current levels.

The analysts noted that the company’s first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) was 15% below the consensus estimates. Notwithstanding the near-term weakness suggested by the guidance, the full-year EBITDA guidance was essentially in line, they added.

UBS expressed concerns over the guidance's back-end nature, adding that the company needs to execute to regain investor confidence.

The Chicago, Illinois-based company’s results also drew price target cuts from JPMorgan, DA Davidson and BTIG.

JPMorgan reduced its price target to $17 from $21, citing the sizable fourth-quarter miss, which the firm believes is due to the pullback in dealer spending as inventory levels normalized. 

The firm has a ‘Neutral’ rating on the stock.

DA Davidson, which cut its price target for the stock to $14.50 from $21, said fourth-quarter core dealer revenue missed expectations due to another quarter of paying dealer declines. The brokerage has a ‘Buy’ rating on the stock,

The retail sentiment toward the stock on the Stocktwits platform stayed ‘bullish’ (71/100) and the message volume stayed ‘high.’

Some retailers on the platform pointed to the oversold levels even as the enterprise value to EBITDA remained attractive.

Cars.com stock fell over 21% on Thursday before recouping some of the losses on Friday. It settled the week's final session up 9.73% at $13.20. 

The stock, which has traded in a 52-week range of $11.78-$21.24, is down about 24% year-to-date.

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