Carvana Stock Hit With Bear Note on Valuation Concerns

The stock's first quarter of 2022 was its worst on record

Deputy Editor
Apr 5, 2022 at 9:30 AM
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Carvana Co (NYSE:CVNA) this morning, was downgraded to "sector perform" from "outperform" at RBC Capital Markets. The analyst also slashed it price target to $138 from $155, citing valuation concerns and its recent Adesa acquisition, which the analyst thinks Carvana may have difficulty integrating into its company. In response, CVNA is down 4.3% to trade at $127.20. 

Carvana stock has already shed 42.6% this year, with overhead pressure at the 60-day moving average keeping a lid on its late-March rally attempt. The stock just notched its fifth-straight monthly drop, and logged its worst quarterly return on record last week. 

These technical troubles have elicited a response from short sellers. In fact, short interest rose 26.3% in the last two reporting periods, and now makes up 19.8% of the stock's available float, or nearly a week's worth of pent-up buying power.

There's room for more members of the brokerage bunch to follow RBC's lead. Coming into today, 14 of the 19 analysts in coverage called CVNA a "buy" or better, without a single "sell" on the books. What's more, the 12-month consensus price target of $225 is a whopping 69.2% premium to last night's settlement. 



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