Carvana cut to Hold at Truist on risk to equity from possible debt restructuring

Truist analyst Naved Khan downgraded Carvana to Hold from Buy with a price target of $5, down from $50, as part of a broader research note on Internet names. The analyst cites the risk to equity holders from a potential debt restructuring, which could happen if the company’s management looks to bring high debt servicing costs under control as the business continues to face headwinds from a tough macro environment. Khan adds that while Carvana has been aggressively cutting fixed expense, he also sees execution risks as elevated.