Wedbush analysts upgraded shares of Carvana Co (NYSE:CVNA) to Neutral from Underperform with a new price target of $48, up from $40 per share, in a note Monday.

They told investors there is near-term upside, but the medium and long-term are “uninviting.”

“We are upgrading our rating on CVNA as the recently completed debt exchange and improving profitability could drive upside in 3Q23 and 4Q23, and also give the company at least two years of breathing room to execute,” the analysts wrote.

“The company is benefitting from more favorable industry pricing conditions, loan sales that are on pace to greatly exceed originations, and favorable pricing in the ABS market, which should help drive upside in the near term.”

The analysts also noted that CVNA has made “significant progress” on operational initiatives that should contribute to sustainably higher retail gross profit per unit (GPU) levels.

“That said, the company’s view of sustainable retail GPU improvement of $600-$1,100 vs. 2021 appears high to us, particularly when the company pivots to growth,” commented the analysts, who also believe there is a mixed industry and competitive outlook.