Refile: BUZZ-Carvana rises as RBC turns bullish after stock's pullback

Ally Financial

07/01/2025 13:34

(Refiles to remove extraneous word "supply" in 6th bullet)
** Carvana's  CVNA.N  shares up 5% premarket to $198.22 after
RBC upgraded used-car retailer to 'outperform' from 'sector
perform'
    ** Brokerage boosts PT by $10 to $280, implying 48% upside
to stock's Mon close
    ** "After CVNA's remarkable turnaround last year, we see the
controversial pullback as an opportunity," RBC analyst team led
by Brad Erickson wrote in note
    ** Co's retail unit sales could exceed expectations,
especially as vehicle supply improves, Erickson said, adding he
believes GPU (gross profit/unit) levels are more durable than
feared
    ** He also expects balance sheet improvement by co and
clearer path to sustainable free cash flow generation
    ** CVNA's supply constrained business model and
underpenetrated total addressable market (TAM), could "create an
unexpected compounder over time," Erickson said
** On Fri, CVNA shares closed down 11%, a day after Hindenburg
Research revealed a short position and accused co of insider
trading and accounting manipulation
** On Mon, stock snapped five-session losing streak ending
session up nearly 7% after CVNA said in a filing it
reestablished an agreement with Ally Financial  ALLY.N  to sell
up to $4 bln in automotive finance receivables over the next
year
    ** Avg rating among 24 analysts covering CVNA is "buy" and
their median PT is $250, per LSEG
    ** Through Mon, stock off 7% to start 2025. Shares ended
2023 at $52.94 after finishing 2022 at $4.74

(Lance Tupper is a Reuters market analyst. The views expressed
are his own)
((lance.tupper@tr.com 1-646-279-6380))