Carvana To See Better Profitability After Solid Q2 On Cost Control, Analyst Boosts Target

Stephens analyst Daniel Imbro reiterated the Equal-Weight rating on Carvana Co. CVNA, raising the price target to $42 from $9.

The company recently reported better-than-expected second-quarter sales and guided positive adjusted EBITDA for the third quarter.

CVNA's second quarter results were encouraging, notes the analyst, raising the future adj. EBITDA estimates.

Imbro raised FY23 adj. EBITDA estimate from $13.4 million to $246.9 million, reflecting the second quarter beat and better profitability in the future from expense control.

As of quarter-end, Carvana had ~$3.5 billion in total liquidity, consisting of $1.5 billion in cash and revolving facility availability and ~$2 billion in unpledged real estate. Going ahead, the analyst expects the company to reduce balance sheet debt by ~$1.2 billion.

Imbro anticipates CVNA's other GPU to be above historical levels for at least the back half of this year, with sequential moderation as the company moves through 2024. The analyst thinks the total GPU in the third quarter will be above $5,000, including the benefit from loans sold during the quarter. 

The analyst also raised the FY24 Adjusted EBITDA estimate from ($21.5 million) to $212.7 million. 

The analyst raised EPS estimate from $(5.59) loss to $(4.40) loss, and FY24 estimate upgraded from $(5.79) loss to $(4.95) loss.

Price Action: CVNA shares are trading lower by 2.5% to $45.08 on the last check Tuesday.