RBC's Brad Erickson ultimately expects Carvana's stock to better reflect the company's "more measured fundamentals."
RBC Capital Markets analyst Brad Erickson is pumping the brakes after an eye-popping surge in shares of Carvana Co.
He downgraded the stock to underperform from sector perform Thursday morning, as the company is in the middle of a rally that has lifted shares nearly 1,100% so far this year. They gained 40% in Wednesday’s session alone in the wake of Carvana’s CVNA most recent earnings report, which was accompanied by news of a deal with bondholders.
Though Carvana “now has more breathing room , the company will need to make much more substantial improvements in unit economics for this business to be viable and for there to be long-term value for the equity,” he wrote while sticking with an underperform stance.
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