Citi downgrades Cazoo on cash preservation strategy

Cazoo

08/06/2022 16:18

** Shares of European online car retailer Cazoo Group Ltd
 CZOO.N  down 3.8% at $1.24 in morning trade
    ** Brokerage Citi downgraded CZOO to "neutral" from "buy"
rating as co focuses on cash preservation over growth
    ** Says that co's pivot to cash preservation is sensible but
execution is key; cuts PT to $1.50 from $9
    ** The retailer said on Tuesday it would cut its workforce
by about 15% as it looks to conserve cash amid rising inflation
and interest rates as well as supply-chain issues  urn:newsml:reuters.com:*:nL4N2XU28F 
    ** Brokerage says Cazoo probably went too hard and fast
given the complexity of operating the business, but at the time,
access to capital was not a problem and used-car pricing was
rising 
    ** Citi says it continues to believe in co's longer-term
structural growth opportunity and still expects decent growth
but at a lower pace than previously assumed
    ** All 6 brokerages covering the stock rate it "hold"; their
median PT is $1.60 - Refinitiv data
    ** Up to Tuesday's close, stock had fallen about 79% YTD

 (Reporting by Aishwarya Nair in Bengaluru)