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They said CVNA’s better second quarter results, debt restructuring, and newly enabled access to equity capital reduced liquidity risks once again and is “a big positive for the stock.”
However, sticking to fundamentals, the firm moves to Underperform as they “believe LT margin improvements are now likely well/overly-appreciated.”
“A faster (potentially margin-stalling) return to growth is likely necessary to cover debt costs and significant dilution & expanding debt load post-restructure are likely coming,” wrote the analysts.
“Raising ests/target given better near-term performance & lower liquidity risks but would expect the stock & more measured fundamentals to converge over time if and when near-term volatility abates,” they concluded.
After a more than 40% rise Wednesday, Carvana shares are up 1.6% premarket Thursday at the time of writing.
