Carvana stock downgraded to market perform at Cowen & Co.

According to reports from CNBC, research analysts at Cowen & Co. downgraded Carvana from “outperform” to “market perform, based on the retailer’s significant debt load and unmet expectations so far in 2022.

Analyst John Blackledge reports “elevated interest rates and a weakening consumer remain the reason for the sentiment shift and slash to estimate through 2027.”

In addition, Blackledge reduced his price estimate for the business to $10 per share. As Carvana’s business falters in the face of an unclear economic picture, analysts have continued to lower expectations for the company. Carvana announced earlier this month that practically every part of its operations had declined for the third quarter and that both the top and bottom lines had missed expectations.

Here’s how Carvana has performed, compared with analyst estimates as compiled by Refinitiv:

• Loss per share: $2.67 vs. $1.94  expected 
• Revenue: $3.39 billion vs. $3.71 billion 

Baird also cut its price objective for the stock from $13 to $7 on Tuesday, expressing doubts about management’s capacity to reduce operating costs as swiftly as planned.

Ernie Garcia, CEO of Carvana, believes that “though success is rarely linear, we remain on the path to being the largest and most profitable automobile retailer.”

Although the economic climate remains uncertain, Garcia states that the company is firmly focused on achieving profitability. The company anticipates difficulty in the coming year due to, among other things, the normalization of the overvalued used-car market and rising interest rates.

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