JMP Securities analyst Nicholas Jones has doubled his price target on shares of Carvana Co. CVNA to $50, “entirely due to multiple expansion,” he wrote Tuesday. “First, there is material upside to CVNA’s multiple as it progresses toward profitability…relative to its pre-pandemic average,” he wrote in a note to clients. “Second, while we do not see the need for CVNA to raise capital…the higher the stock price goes, the easier, seemingly, it would be for CVNA to raise capital, while avoiding a significant dilutive event, which in turn, should reduce the risk of bankruptcy, driving shares higher.” Carvana offered an upbeat outlook in early June, meaning that “expectations are likely set for the quarter,” Jones wrote. “As CVNA progresses toward durable positive adjusted [earnings before interest, taxes, depreciation and amortization] and significant positive unit economics, focus will increasingly shift to when investors can expect a return to growth, which we believe can be a material catalyst to its share price.” He rates the stock at market outperform.
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