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Shares of Cazoo Group (NYSE:CZOO) are up almost 9% today after a Berenberg analyst upgraded from Sell to Buy with a $2.33 per share price target.
The double-upgrade comes after Berenberg started research coverage on Cazoo shares with a Sell rating due to high costs and poor competitive positioning.
However, the analyst is much more positive on CZOO now after the management said it will review its European operations, which he believes could lead to a full exit. Cazoo expects to complete this review by the next month.
“We argued in our initiation that such a move would eliminate the company’s funding gap, allow it to better drive the UK business and ultimately generate much higher value for shareholders. With this key positive catalyst playing out much sooner than we expected, and after updating our forecasts and valuation to reflect a full European exit, we believe the shares do not reflect the value of this move,” the analyst said in a client note.
Cazoo reported a 124% jump in vehicles sold compared to the same period last year.
“We achieved record revenues and retail unit sales in Q2 and grew our market share significantly, despite the tough macroeconomic backdrop, as the consumer shift towards online car buying continues to accelerate,” CEO Alex Chesterman said in a statement
Cazoo shares are down 85% YTD after closing at $0.92.
