Cars.com’s stock soars after upbeat revenue outlook leads to analyst upgrade

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Shares of Cars.com Inc. soared 20.0% in active afternoon trading Thursday, after the online auto marketplace’s upbeat revenue outlook prompted an analyst upgrade. Trading volume was 7.6 million shares, compared with the full-day average of about 863,000 shares. The company said late Wednesday that it expects third-quarter revenue of $142 million to $144 million, above the FactSet consensus of $141.7 million. The company said cancellation rates have fallen to record lows and net growth of dealer customers reached nearly 100 during the quarter. “The digital car-buying market has strengthened and dealer customers are further leveraging our unique digital solutions to drive profitable sales,” said Chief Executive Alex Vetter. B. Riley FBR analyst Lee Krowl upgraded the company to buy from neutral, and raised his price target to $11 from $9. He said his neutral rating was predicated on dealer retention and leverage issues. “With signs of progress on these metrics, coupled with a third-straight quarter of solid execution, we are more constructive on the trajectory of the business,” Krowl wrote in a note to clients. The stock has still lost 21.4% year to date, while the S&P 500 has gained 7.7%.
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