By Dhirendra Tripathi

Investing.com – Carvana (NYSE:CVNA) shares were down 2% in Wednesday’s premarket trading as JPMorgan (NYSE:JPM) downgraded the stock to ‘neutral’ from ‘overweight’.

Analyst Rajat Gupta maintained his $325 target for the stock, still an upside of 3.8% from its closing level of $313.10 on Tuesday.

According to Gupta, the stock has hit a near-term top.

Gupta said they continue to like the company’s disruptive business model and related long-term growth potential, but “. . .we believe the recent rebound in shares coupled with a meaningful pull back in brick & mortar auto retailers, makes the near-term relative risk-reward less favorable.”

Shares of the auto e-commerce company are up nearly 146% in the past 12 months, outperforming the broader market.

The online retailer of used cars has benefited from a number of factors in recent months. People returning to work after the pandemic have been reluctant to use public transport, and a global shortage of semiconductors has crimped availability of new models at dealerships across the U.S. All that has squeezed prices so hard that used cars have been largely responsible for the rise in overall consumer prices in the last two months. 

Prices of used cars and truck prices climbed 7.3% in May after a surge of 10% in April, a 68-year record.