Carvana upgraded to Outperform from Sector Perform at RBC Capital

RBC Capital analyst Brad Erickson upgraded Carvana (CVNA) to Outperform from Sector Perform with a price target of $280, up from $270. After Carvana’s “remarkable turnaround” last year, RBC sees the “controversial pullback” in the shares as an opportunity, the analyst tells investors in a research note. The firm’s bottoms-up cohort analysis implies retail unit upside at Carvana, particularly as supply improves. It believes the company’s gross profit per unit levels are largely sustainable, despite recent concerns, and is “intrigued” at Carvana’s marketplace opportunity. RBC expects “marginal” balance sheet improvement going forward as the company illuminates a clearer path to real free cash flow.