Why These 4 Analysts Cut Carvana’s Price Target

Carvana Co. CVNA last Wednesday announced disappointing first-quarter results.

BofA securities: Analyst Nat Schindler maintained a Buy rating on the company while reducing the price target from $277 to $225.

“Omicron remained a headwind in Q1, putting pressure on production and logistics capacity, which hurt the business both in its ability to deliver cars on time (therefore satisfy customers) as well as than in its ability to move cars through its reconditioning centers,” Schindler said in the report. .

“Rising prices and rates also weakened consumer demand as monthly used car prices rose,” he added.

Needham: Analyst Chris Pierce reiterated a buy rating on the company, while reducing the price target from $173 to $121.

While Carvana’s first-quarter impression largely missed expectations, “an offer of $568 million (the amount offered to public investors) undermines management’s credibility,” Pierce said in the note.

“We expect the stock to be in the penalty zone for an extended period, but we still expect the GPU to rise on the back of steady market share gains,” he added.

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Wells Fargo: Analyst Zacharie Fadem maintained an overweight rating, while raising the price target from $50 to $150.

With an increasingly deteriorating macroeconomic environment, the latest capital raise and the outlook for fiscal year 2022 effectively drawn, “we find it difficult to see the bad news worsening from here,” Fadem said in a statement. Note.

“On a positive note, investors were bracing for it, most headwinds are transitory (and improving), and remanufacturing capacity headwinds are expected to improve significantly with 3 new IRCs in Q1 and the ADESA closing in May,” he added.

RBC Capital Markets: Analyst Brad Erickson reiterated a Sector Perform rating, while reducing the price target from $138 to $85.

“CVNA’s 1Q22 report contained virtually everything we feared during our recent downgrade, with the founders contributing $432 million to the upcoming capital raise being the unexpected wildcard,” Erickson said in the note.

“The thinking behind our recent stint is intact: the company’s long-term vision forces it into an unnecessary debt position with virtually no room for error in the event of poor execution or slower growth. request,” he added.

Price Action: Carvana shares rose 0.73% on Friday, closing at $83.75, according to BenzingaPro. The stock marked a fresh 52-week low last week at $79.28, after trading at a 52-week high of $376.83 in August 2021.

Photo: Courtesy of Tony Webster on Flickr