Carvana (CVNA) PT Raised to $11 at Citi, Stays Neutral

Citi analyst Ronald Josey raised the price target on Carvana (NYSE: CVNA) to $11.00 (from $5.50) while maintaining a Neutral rating.

The analyst comments "Amid a challenging used vehicle market in 4Q, Carvana reported 4Q22 revenue 8% below consensus as retail unit sales declined 23% Y/Y and adj. EBITDA loss of $(291M) versus consensus of $(203M). Although the broader market appears to be stabilizing, management is focused on achieving positive FCF over time, beginning with positive adj. EBITDA through cost reductions and GPU improvements. Carvana removed $60M in non-GAAP SG&A costs sequentially in 4Q22 and plans to remove an additional $100M by 2Q22. GPU is expected to trough in 4Q with a path back to $4,000+ as inventory levels normalize relative to demand and transitory headwinds abate. While visibility remains limited, Carvana ended 4Q with $3.9B of available liquidity resources providing some flexibility as management improves its unit economics once unit volumes stabilize and a more normalized environment for used vehicles emerges. Raising our TP from $5.50 to $11, maintaining Neutral/High Risk rating."

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