Carvana stock jumps on strong earnings, outlook upgrades

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Carvana stock jumps on strong earnings, outlook upgrades

Carvana Co.'s stock increased more gains Friday after a whopping 56% rally in the previous session, as analysts issued positive comments and lifted some of their performance estimates for the used-car seller, but hold off on any rating enhancements.

On Friday, Carvana CVNA was up about 4% in regular trading and was one of the most active in premarket action.

On Thursday, the stock surged on a hiked outlook from the car seller. Sharon Zackfia, William Blair analyst, resumed a market perform rating on Carvana and said the company's progress was encouraging but added she was seeking improved visibility on liquidity and free cash flow generation before any potential stock upgrade. William Blair increased its adjusted gross profit per unit GPU estimate for Carvana to about $6,040 compared to nearly $5,100 previously. William Blair also increased its projection for Carvana's adjusted earnings ahead of interest, taxes, depreciation and amortization Ebitda to nearly $83 million, from an earlier projection for a loss of $6 million on second-quarter used units sold of 78,000. Raymond James analyst Mitch Ingles reiterated a market perform rating on Carvana and hiked his outlook for the company's adjusted EBITDA and gross profit per unit but said the company still faces challenges. Even if CVNA can achieve positive adjusted Ebitda in 2023, it comes at the expense of revenue growth, which we estimate to be down 26% via market share losses on reduced inventory count and advertising, Ingles said. Rajat Gupta, JPMorgan's analyst, said the company's stronger forecast on gross profit per unit was mainly driven by higher-than-expected loan sales in the second quarter.