UPDATE: Berenberg Upgrades Cazoo Group (CZOO) to Buy

Berenberg analyst Saim Saeed upgraded Cazoo Group (NYSE: CZOO) from Sell to Buy with a price target of $2.33 (from $0.49).

The analyst comments "We initiated coverage of Cazoo with a Sell rating as, despite liking the online business model and its UK potential, we thought its late launch in Europe has left it saddled with significant fixed costs, while its poor competitive positioning there left it unable to offset these costs through operating leverage. This led us to forecast a £300m funding gap in 2024, thus introducing significant financing risk. At last week’s H1 results, however, management indicated a significant pivot in strategy by announcing a review of its European operations, which we believe will lead to a full exit. We argued in our initiation that such a move would eliminate the company’s funding gap, allow it to better drive the UK business and ultimately generate much higher value for shareholders. With this key positive catalyst playing out much sooner than we expected, and after updating our forecasts and valuation to reflect a full European exit, we believe the shares do not reflect the value of this move and we upgrade Cazoo from Sell to Buy. The review’s outcome is expected in September."

For an analyst ratings summary and ratings history on Cazoo Group click here. For more ratings news on Cazoo Group click here.

Shares of Cazoo Group closed at $0.92 yesterday.

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