Carvana upgraded to Overweight from Neutral at JPMorgan

JPMorgan upgraded Carvana to Overweight from Neutral with a price target of $130, up from $70, following the Q1 beat. The company reported another strong print with above seasonal unit growth and further improvement in unit economics, the analyst tells investors in a research note. The firm says Carvana’s “rapid progress” on margin expansion and overall EBITDA, combined with existing cash on the balance sheet, “should put to rest any lingering concerns around optionality to reduce debt/interest burden over time.” The thesis and debate has shifted towards Carvana’s ability to continue at this pace of throughput expansion while expanding margins along the way, says JPMorgan. It thinks the company has “significant wiggle room to add some slack to its operations” to drive accelerated growth and demonstrate leverage on fixed costs.