CVNA - Carvana is sized up by BofA after turnaround story hits a higher gear

2023-05-08 06:42:12 ET

Bank of America thinks the Carvana ( NYSE: CVNA ) turnaround story may be picking up steam, although the debt load piece still casts a long shadow.

Analyst Nat Schindler noted that Carvana's ( CVNA ) effective cost-cutting measures helped the auto retailer top Q1 revenue and adjusted EBITDA expectations, while total gross revenue per unit also surprised at $4,303 vs. $3,827 consensus offcoutsized sequential improvement in the wholesale business.

"While the results are encouraging, we remain cautious due to the immense debt burden ($6bn+) the company faces. We believe that Carvana must undergo extraordinary measures to prevent the drying up of easily accessible cash by the end ’23."

BofA lowered its Q2 revenue Carvana, while hiking the adjusted EBITDA estimate to positive territory. The firm kept a Neutral rating in place as it reiterated a warning that without a cash infusion, Carvana is likely to run out of easily available cash by the end of 2023.

Shares of Carvana ( CVNA ) gained 0.55% in premarket trading on Monday after a 24.55% pop on Friday.

More on Carvana:

• Read breakdowns on Carvana from Seeking Alpha analysts
• Check out the earnings report highlights
• View the growth metrics
• See the financial and valuation comparisons to sector peers
• Dig into the Seeking Alpha Quant Rating

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