Investing.com -- Wells Fargo analysts said Tuesday that Carvana Co (NYSE: CVNA) continues to show sustainable market share gains and production improvements following a group meeting with the company's investor relations team.

The bank met with Mike Mckeever, Meg Kehan and Austin Knutson from Carvana's investor relations team to discuss second-half priorities and business execution.

Carvana's main focus is expanding production and vehicle selection, which has driven growth in specific markets, Wells Fargo said. Northeast and Midwest retail units grew 54% in the second quarter, compared to the company average of 38%.

The company is maintaining recent improvements in labor hours per vehicle produced despite accelerating production growth. Management-focused CARLI tools were at 5 production sites in June and will be rolled out more broadly in the future.

On gross profit per unit and selling, general and administrative expenses, Carvana sees potential for fundamental gains, with fixed cost leverage serving as the primary driver of potential margin improvement. Advertising cost per unit is a couple hundred dollars lower in the company's oldest markets compared to newer ones, suggesting room for additional improvement.

Higher fuel costs impacted unit economics with a $75 per unit drag in the second quarter, but increasing inventory density provides an offset, the bank noted.

Carvana expects 6 to 8 capex-light ADESA integrations in 2026, implying approximately 3 to 5 in the second half. The company started construction of its first full buildout in the second quarter, with production expected in early 2027. Of the 37 ADESA locations not yet integrated, Carvana expects most to have the full buildout as it targets 3 million retail units per year by 2030 to 2035.

The company is reducing leverage on its balance sheet to approximately 1 times net debt to EBITDA. The senior note refinancing lowers interest expense by about $45 million per year. Carvana is focused on achieving an investment grade rating and plans to hold extra cash on the balance sheet rather than returning capital to shareholders.

Most large dealers complied with the Federal Trade Commission's new price advertising requirements quickly, and Carvana held customer-facing rates in the second quarter.

Wells Fargo raised its fiscal 2026 and 2027 earnings per share estimates by 4 cents and 5 cents to $1.64 and $2.15, respectively. The bank values the shares at approximately 20.5 times its fiscal 2027 EBITDA estimate.