Carvana (CVNA) PT Raised to $108 at Deutsche Bank

Deutsche Bank analyst Emmanuel Rosner raised the price target on Carvana (NYSE: CVNA) to $108.00 (from $66.00) while maintaining a Hold rating.

The analyst comments "Yesterday’s considerable positive stock reaction to Carvana’s Q1 print, in our view, reflects market enthusiasm around the company’s reiteration of positive momentum heading into rest of year, as it demonstrates its ability to return to growth mode in a profitable manner. Indeed, Carvana continues to demonstrate improved progress in its path toward positive profit under its revised strategy focusing on cost efficiencies. Adjusted EBITDA reached $235m (margin of 7.7%) in the quarter, meaningfully above Consensus calling for $128m, and exceeding capex and interest expense. Importantly, management commented that it expects to see a sequential increase in adjusted Ebitda, and should comfortably deliver on its outlook of y/y growth in retail units sold and adjusted Ebitda for FY24. Overall, we think Q1 Ebitda level provides a clear demonstration of the company’s ability to return to growth in a profitable manner. Indeed, Carvana said it will continue to work on projects that will drive efficiency across both variable costs and gross profit. The key question here remains as the company looks to much higher growth, how the trajectory of costs associated with growth will trend under both favorable and unfavorable market conditions. As it grows, we believe there is a delicate balancing act that the company will have to maintain. Nonetheless, the potential for leverage in the system is more visible, as showcased by Q1 as well as Q2 guidance."

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