Barclays Lifts CARG Target as Options Turn Bullish

CarGurus heads into its August 6 earnings with the Street growing more optimistic and options traders the most bullishly positioned they have been all year.

The clearest signal this week came from the analyst desk. Barclays lifted its price target on CarGurus to $40 from $35 this morning — the same analyst who initiated coverage at $35 in late May, now upgrading the implied upside just as the stock has closed the gap. At $35.06, CarGurus trades within striking distance of the consensus mean target of $37.77. The broader analyst picture is constructive: most firms that moved after the May earnings print — RBC, UBS, JPMorgan, Needham — all raised targets, with Needham the most bullish at $43. The direction of travel is clearly upward, even if some mid-tier firms stay on the sidelines.

Options positioning is the sharpest signal in the data right now. The put/call ratio has collapsed to 0.31, more than two standard deviations below its 20-day average of 0.45 — the most call-heavy reading in the past year. That is a notable shift from June, when the PCR ran persistently above 0.48, and it reflects strong demand for upside exposure rather than downside protection. The stock is up nearly 17% over the past month to $35.06, and options traders appear to be leaning into that momentum ahead of the print.

Short interest, by contrast, tells a quieter story. At 8.5% of free float, the short position remains meaningful in absolute terms but has been unwinding steadily — down nearly 9% over the past month, with roughly 1 million fewer shares short than at the end of June. The borrow market is completely relaxed: cost to borrow is running at just 0.48%, and availability is at 872% of outstanding short interest, meaning roughly nine shares are available for every one already lent out. There is no squeeze dynamic here, and the short-score has drifted lower from 55 to 52 over the past two weeks, consistent with a gradual reduction in short-side pressure.

The bull case rests on CarGurus' position as the largest US online automotive marketplace, with the PriceVantage dealer software gaining traction and AI-driven lead generation improving conversion. Bears counter that dealer adoption of its transactional marketplace remains uneven, Google traffic dependency is a structural vulnerability, and the stock's price-to-earnings multiple near 12.8x and price-to-book above 8x leave little room for a miss. EPS momentum has been solid over 30 and 90 days, but the 12-month forward earnings growth factor scores in the bottom quintile of the universe — a reminder that the near-term profitability story is better than the growth story. Insider activity from early July was uniformly directional sells from the CEO, President, CTO, and CMO, though the individual amounts were modest and the significance scores low, suggesting routine plan-based sales rather than a conviction signal.

The last two earnings prints produced day-one drops of 4.4% and 7.1% respectively, with the May quarter extending to a 19.7% five-day loss. The stock has since recovered sharply, but the pattern of post-earnings weakness is the one data point that sits awkwardly alongside the current bullish options skew — August 6 is the next moment those two signals will have to reconcile.