{"id":41445,"date":"2023-07-28T03:48:14","date_gmt":"2023-07-28T07:48:14","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/carvanas-stock-second-chance-is-already-priced-in-morgan-stanley-says\/"},"modified":"2023-07-28T03:48:16","modified_gmt":"2023-07-28T07:48:16","slug":"carvanas-stock-second-chance-is-already-priced-in-morgan-stanley-says","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=41445","title":{"rendered":"Carvana\u2019s stock \u2018second chance\u2019 is already priced in, Morgan Stanley says"},"content":{"rendered":"
\n

Carvana Co.\u2019s stock deserves to rally after the company\u2019s \u201cstronger\u201d quarterly results and improvements in capital structure, but the auto retailer\u2019s \u201csecond chance for success\u201d is already priced in, analysts at Morgan Stanley said in a note Thursday. <\/p>\n

The analysts, led by Adam Jonas, downgraded their rating on Carvana shares
\n CVNA,
\n -7.52%<\/bg-quote>
\n to the equivalent of sell, saying that they think \u201cmuch of the rally is deserved but the stock has run well above our increased target, driving a less favorable risk-reward.\u201d<\/p>\n

\n

Carvana last week reported stronger-than-expected second-quarter results, and crucially struck a debt-reducing deal with its bondholders aimed at bolstering liquidity. Shares of Carvana have skyrocketed more than 750% this year, making the S&P 500 index\u2019s 19% advance look paltry in comparison. <\/p>\n

See also:<\/strong> Carvana\u2019s stock has roared back from the brink. This chart shows its meteoric surge.<\/p>\n

\u201cCarvana achieved its first step toward a self-financing future\u201d by posting a positive adjusted EBITDA, higher-than-expected retail gross profit per unit, and lower-than-expected selling and general expenses, the analysts said.<\/p>\n

See also:<\/strong> Carvana\u2019s debt restructuring is good news, but its losses are \u2018hardly in the growth stock handbook,\u2019 analyst says<\/p>\n

\u201cIn addition to pushing out liquidity concerns short term, the company must demonstrate they can sustain their progress,\u201d however, they said. <\/p>\n

\u201cInvestors will look to whether the improvement in [the second quarter] can be replicated, whether sufficient structural changes have been made to avoid negative operating leverage upon scaling unit volumes again, and whether the debt restructuring is sufficient to stave off liquidity concerns.\u201d<\/p>\n

For al that Carvana executives deserve \u201ccredit\u201d for executing on cost saving and taking a decisive action to provide \u201csignificant\u201d financial breathing room, challenges remain, the Morgan Stanley analysts said. <\/p>\n

Those concerns include questions about the used-car market and even the \u201cviability of [Carvana\u2019s] long-term business model. \u201c<\/p>\n

\u201cEven considering our expectation of continued recovery in the business and less
bearish views on the used car market, the stock\u2019s reward-skew\u201d plus an implied 20%
downside to Morgan Stanley\u2019s $35 price target moved the stock rating to sell, the analysts said. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Carvana Co.\u2019s stock deserves to rally after the company\u2019s \u201cstronger\u201d quarterly results and improvements in capital structure, but the auto retailer\u2019s \u201csecond chance for success\u201d is already priced in, analysts at Morgan Stanley said in a note Thursday. The analysts, led by Adam Jonas, downgraded their rating on Carvana shares CVNA, -7.52% to the equivalent […]<\/p>\n","protected":false},"author":1,"featured_media":41446,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-41445","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nCarvana\u2019s stock \u2018second chance\u2019 is already priced in, Morgan Stanley says | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Carvana Co.\u2019s stock deserves to rally after the company\u2019s \u201cstronger\u201d quarterly results and improvements in capital structure, but the auto retailer\u2019s\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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