UPDATE: Raymond James Starts Carvana (CVNA) at Market Perform
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(Updated - April 7, 2021 4:47 PM EDT)
Raymond James analyst Nicholas Bacchus initiates coverage on Carvana (NYSE: CVNA) with a Market Perform rating.
The analyst comments "We see many positives in the story, however we believe current valuation appropriately reflects the strong growth opportunity. We think Carvana is uniquely positioned to disrupt the used car retailing industry. Given its first mover advantage and current scale, it can continue to be the largest player in the sector, and growth will continue to be very strong given that we believe the shift to digital in used cars is still in nascent stages. We see the central positives for the Carvana story as being 1) the large TAM of the used car market and the very low penetration of online commerce in the sector; 2) it's first mover advantage and large scale (second-largest used car dealer in the U.S.); 3) strong cohort behavior; 4) accelerating capacity; 5) favorable industry backdrop in 2021 and beyond; and 6) healthy long-term GPU and EBITDA margin profile. However, with it trading ~37x our FY21 Gross Profit and nearly 6x EV/Revenues, we believe risk/reward is balanced and would look to get more constructive on a pullback."
Shares of Carvana closed at $277.60 yesterday.
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