Why These 4 Analysts Cut Carvana's Price Target

Carvana Co CVNA last Wednesday reported disappointing first-quarter results.

BofA Securities: Analyst Nat Schindler maintained a Buy rating on the company while reducing the price target from $277 to $225.

“Omicron remained a headwind in 1Q, pressuring production and logistics capacity which hurt the company in both its ability to deliver cars on time (thus satisfy customers) as well as its ability to move cars through its reconditioning centers,” Schindler said in the report.

“Rising prices and rates also weakened consumer demand as monthly out of pocket prices for used cars rose,” he added.

Needham: Analyst Chris Pierce reiterated a Buy rating on the company, while trimming the price target from $173 to $121.

While Carvana’s first-quarter print broadly missed expectations, “a $568MM offering (the amount offered to public investors) denting management credibility,” Pierce said in the note.

“We expect the stock to be in the penalty box for an extended period, but still anticipate GPU upside from consistent market share gains,” he added.

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Wells Fargo: Analyst Zachary Fadem maintained an Overweight rating, while raising the price target from $50 to $150.

With an increasingly deteriorating macro environment, the latest equity raise and the outlook for fiscal 2022 effectively pulled, “we struggle to see the bad news worsening from here,” Fadem said in the note.

“On a positive note, investors were bracing for this, most headwinds are transitory (and improving), and reconditioning capacity headwinds should improve considerably with 3 new IRCs in Q1 and the ADESA closing in May,” he added.

RBC Capital Markets: Analyst Brad Erickson reiterated a Sector Perform rating, while reducing the price target from $138 to $85.

“CVNA's 1Q22 report contained virtually everything we'd feared in our recent downgrade with the founders contributing $432M of the upcoming capital raise being the unexpected wildcard,” Erickson said in the note.

“The thinking behind our recent move to the sidelines is intact: the company's lofty long-term vision is forcing it into an unnecessarily leveraged situation leaving virtually no margin of error in the event of mis-execution or demand softening,” he added.

Price Action: Carvana shares were up 0.73% on Friday, closing at $83.75, according to Benzinga Pro. The stock marked a new 52-week low last week at $79.28, after trading at a 52-week high of $376.83 in August 2021. 

Photo: Courtesy of Tony Webster on Flickr