Carvana stock rating reiterated at Buy by BTIG amid credit concerns

Investing.com - BTIG has reiterated its Buy rating and $450.00 price target on Carvana (NYSE:CVNA) despite growing concerns about the online used car retailer’s financing activities and credit exposure. The company has demonstrated strong financial performance, with revenue growing 39.5% and maintaining a healthy current ratio of 4.0, indicating solid liquidity.

The reaffirmation comes amid increased investor scrutiny following the bankruptcy of sub-prime lender Tricolor and CarMax adding more reserves to its loan portfolio, according to BTIG analyst Marvin Fong.

BTIG’s analysis examined Carvana’s underwriting practices, asset-backed securities (ABS) construction, potential loss outcomes, and possible impacts if the company’s sub-prime ABS were to experience principal losses.

The research firm concluded that Carvana is unlikely to lose access to securitization markets even if past securitizations face impairment to their equity tranche, and that any potential financial impact from strengthening future ABS credit profiles would be "quite manageable."

BTIG maintained Carvana as a "Top Pick," stating that despite heightened interest in credit quality issues across consumer markets, the firm continues to view Carvana’s "fundamental value drivers as intact."

In other recent news, Carvana has seen a series of positive developments that could interest investors. Moody’s Ratings upgraded Carvana’s corporate family rating to B2 from B3, citing improvements in operating performance and voluntary debt reduction. This upgrade reflects a positive outlook for the company. Jefferies also upgraded Carvana’s stock rating from Hold to Buy, highlighting the company’s advantageous position in the growing digital used car market. Furthermore, JPMorgan raised its price target for Carvana to $425, maintaining an Overweight rating due to the company’s solid fundamentals. Citizens JMP reiterated its Market Outperform rating with a $460 price target, supported by favorable industry trends. Meanwhile, in related industry news, Sonic Automotive received a Buy rating from Benchmark, as Amazon continues to expand its automotive marketplace presence. These recent developments emphasize the dynamic shifts within the used car and broader automotive markets.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.