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Fly News Breaks for February 27, 2020
Feb 27, 2020 | 09:04 EDT
Craig-Hallum analyst Steve Dyer raised the firm's price target on Carvana to $55 from $40 following quarterly results, while reiterating a Hold rating on the shares. The analyst believes there were several red flags that should give bulls pause, such as management introducing revenue growth expectations about 10% below Street expectations. Moreover, growth is slowing much faster than he anticipated in its oldest cohorts despite increased CAC spend in those markets. While the company continues to take market share on both the buy and sell side and has nicely improved GPU, it also continues to spend heavily to do it and the analyst questions if/when Carvana will be able to pull back on this spending. Overall, Dyer continues to expect the business to grow revenue quickly but also thinks profitability is much further away than investors expect, cash burn will be significantly higher, and the used vehicle retail business is much harder and more competitive than inherent in the company's $16B valuation.
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