4 big analyst cuts: Carvana downgraded again despite impressive Q2 results

Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Carvana, Sirius XM, Estee Lauder, and XPeng.

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Carvana receives another downgrade

Today, Piper Sandler downgraded Carvana (NYSE:CVNA) to Neutral from Overweight with a price target of $48.00 (previously $29.00). This marks the second rating cut this week, following RBC Capital's downgrade yesterday.

The rating changes came after the company posted impressive Q2 results and announced a debt restructuring agreement, causing the stock to surge over 40% on Wednesday.

According to Piper Sandler, the company’s Q2 results exceeded expectations across almost all metrics, and the restructuring agreement, which covers approximately 90% of the company's total debt, significantly reduced the going concern risk for Carvana.

"But a higher valuation for CVNA would require changes to our long-term volume outlook. And while recent operational improvements (at low volumes) give us greater confidence in CVNA's ability to reach consistent profitability, we don't think they warrant a change to our long-term used vehicle market share expectations."

Shares closed with more than a 16% loss yesterday and are trading around 1% lower in pre-market today.

Sirius XM gets 2 downgrades after massive shares rally

Sirius XM (NASDAQ:SIRI) shares dropped more than 8% pre-market today after two Wall Street firms downgraded the company after a massive shares rally yesterday, which was likely driven by a mix of factors, including short covering, the unwinding of a spread trade involving Liberty SiriusXM (NASDAQ:LSXMA), and potential buying linked to the rebalancing of the Nasdaq 100 index.

Pivotal Research cut its rating to Sell from Hold with a price target of $4.50 (from $4.00). Meanwhile, Evercore ISI downgraded to Underperform from In Line with a price target of $4.50.

"We are downgrading Sirius XM (SIRI) to underperform given the 42% increase in share price yesterday (vs. -1% for the S&P) with no change in business fundamentals. Sirius XM is now by far the most expensive stock in our US cable & telecom coverage universe with secular concerns about the long-term growth."

2 more downgrades

Estee Lauder (NYSE:EL) shares fell more than 4% yesterday after Barclays downgraded the company to Equalweight from Overweight and cut its price target to $193.00 from $210.00, as reported in real time on InvestingPro.

"We expect incremental reinvestment will ultimately pressure medium-term margins & also are wary of a more muted recovery in China.'

JPMorgan downgraded Xpeng (NYSE:XPEV) to Underweight from Neutral with a price target of $10.00 (from $7.50).

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