Wedbush keeps $1 target on Carvana after ‘awful’ quarter

Wedbush views Carvana’s Q4 as "awful," with results that sharply missed even the firm’s below consensus estimates. The analyst agrees with the company that sequential improvement in Q1 is likely, but says its goal of breakeven levels is "extremely lofty and helps explain why the company did not put a timeline on this goal." Moreover, even if Carvana hits this goal, its $600M of annual interest expense and $100M-$125M of "barebones" capex point to annual cash burn of $700M-plus, which is unsustainable against a stated committed liquidity level of $1.9B, the analyst tells investors in a research note. Wedbush believes a restructuring of the company’s balance sheet is necessary to reduce interest expense. It reiterates an Underperform rating on the shares with a $1 price target.