CarGurus (CARG) Stock Forecast & Price Target

CarGurus is positioned to compound value by monetizing its category-leading U.S. marketplace, where revenue rose 13% y/y to $251M in Q2 and U.S. QARSD increased 8% y/y, supported by stronger dealer adoption, pricing power, and better lead quantity and quality. Its outlook is further reinforced by accelerating product innovation: Guru drove 60% sequential lead growth, PriceVantage bookings grew 50%+ sequentially with a 15% median lift in VDPs, and VINMax delivered 23% faster promoted-listing sales and 34% more leads per day. Despite a 34% adjusted EBITDA margin that compressed about 200 bps y/y, adjusted EBITDA still rose 7% y/y to $85M, and management’s improved margin outlook suggests AI-driven efficiency gains and disciplined execution can support both profitability and further growth.

CarGurus is facing a weaker fundamental setup as dealers have become more deliberate on incremental spending amid margin pressure, low used-car inventory, and uncertainty around tariffs, all of which dampen marketing demand and slow dealer acquisition. Management also highlighted that FTC pricing transparency created upheaval and that compliance is still not fully back to normal, while residual CarOffer integration issues and slower adoption of Price Vantage and New Car Exposure delay expected product benefits. Reflecting these headwinds, the model cuts FY26 revenue to $1,015MM, trims U.S. QARSD growth to 7.7%, and lowers expected U.S. dealer adds to 342, underscoring limited near-term operating leverage.