UPDATE: JPMorgan Downgrades Vroom (VRM) to Neutral
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JPMorgan analyst Rajat Gupta downgraded Vroom (NASDAQ: VRM) from Overweight to Neutral with a price target of $15.00 (from $30.00).
The analyst comments "As we have argued many times in the past, we believe VRM remains a misunderstood story, though we acknowledge that the catalyst to re-rating on fundamentals is likely to remain elusive for the time being with scope for further downside given little earnings/asset/brand value support for valuation currently. Management is likely to present updated medium/long-term targets post 4Q21 earnings (and after closing of the UACC deal) which can serve as a potential catalyst for shares (we continue to believe that as the UACC acquisition is integrated, there remains significant runway to improve GPU economics L-T) though conviction will need consistent execution on volumes scaling along with GPU improvement for which we believe investor skepticism is unlikely to change in the current tough capacity ramp and peak used car pricing backdrop. We lower our Dec 2022 PT to $15 from $30 prior on lower revenue/GP estimates and also higher discount rate assumptions in our DCF methodology. We see firm downside support at $10 based on current net cash on balance (net of the convertible bonds valuation) along with TDA and CarStory assets."
Shares of Vroom closed at $13.51 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Downgrades
Related EntitiesJPMorgan, Earnings, Definitive Agreement
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