By Sam Boughedda
Investing.com — Carvana Co (NYSE:) started Tuesday’s session more than 4% lower after RBC Capital downgraded the stock.
Analyst Brad Erickson downgraded the online used car retailer from Outperform to Sector Perform, setting a price target of $138, down from $155.
The analyst said in a note that they are “no longer able to justify the risk/reward as asymmetrically positive for CVNA and thus, downgrade to Sector Perform.”
The analyst added that the company’s acquisition of US auction business Adesa “raises the downside risk from any perceived demand shortfall.”
“Adesa’s upcoming multiyear integration is likely to be challenging. We need more confidence in unit growth necessary to justify the capacity hyper-expansion & cash generation to support the ever-rising b/s leverage and likely future capital raises,” concluded Erickson.
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