BOSTON – Zachary Emerson (NYSE:), CEO of CarOffer, a subsidiary of CarGurus (NASDAQ:), recently sold part of its holdings in the company. According to a Form 4 filed with the Securities and Exchange Commission, Emerson sold 2,203 shares of Class A common stock to CarGurus on January 17 at an average price of $38.12 per share, for a total of $83,978. The sale comes as CarGurus trades near its 52-week high of $39.10, with the stock having returned an impressive 62% over the past year. InvestingPro Data shows the company maintains a good financial health score, with more than 15 additional ideas available to subscribers.
In a separate transaction dated January 16, 1,865 Emerson shares were withheld to cover tax liabilities upon grant of restricted stock units, valued at $37.65 per share. Following these transactions, Emerson will own 115,983 shares of Class A common stock of CarGurus.
The sale was conducted under a Rule 10b5-1 predetermined trading plan, which allows company insiders to prepare a predetermined timeline for the sale of shares, providing a degree of separation from the timing of trades and potential inside information.
In other recent news, CarGurus demonstrated impressive financial performance, with a 5% year-over-year increase in consolidated revenues to $231 million and a notable 15% growth in market revenues, to $204 million. Consolidated non-GAAP EBITDA also saw a significant 33% year-over-year rise. Analysts from Needham, B.Riley and RBC Capital Markets increased their price targets for the company, reflecting confidence in CarGurus' business model and growth potential.
These latest developments indicate that CarGurus has successfully captured the attention and spending of dealer customers compared to its competitors in the used car market, while maintaining an impressive gross profit margin of 80.76%. The company's international business, especially in Canada, contributed to overall growth with a 23% increase in revenue. CarGurus also announced a $200 million stock buyback program, scheduled to begin in January 2025.
Despite anticipating difficult results in 2025, CarGurus remains optimistic about its growth drivers and product offerings, and expects fourth-quarter revenue of between $219 million and $239 million, with market revenue growth expected to range between 14% and 17% year over year. Needham's analysis indicates that CarGurus is not fully leveraging its competitive advantages and is expected to benefit as dealers increasingly rely on data to drive their business. The new target price is based on a 15x multiple of expected adjusted EBITDA, which is an increase from the 12.5x multiple used before.
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