Carvana upgraded to Sector Perform from Underperform at RBC Capital

RBC Capital upgraded Carvana to Sector Perform from Underperform with a price target of $90, up from $45. The stock’s recent run has the potential to trade even higher “before reasonable valuations may matter again,” making Carvana’s risk/reward on an Underperform rating “infeasible for the foreseeable future,” the analyst tells investors in a research note. The firm believes any return to more meaningful unit growth will likely get fully if not overly-extrapolated in the stock with additional amplification possible from the heavy short interest. In addition, the company’s cash generation per car may be better than many investors realize, says RBC.