ACV Auctions' Better-Than-Expected Q4 Earnings Signal Improvements In The Industry, Says Analyst

  • Barrington Research analyst Gary Prestopino reiterated an Outperform rating on the shares of ACV Auctions Inc ACVA and raised the price target from $14 to $16.
  • ACV reported 4Q22 financial results that included a revenue decrease of 2% to $98 million with an adjusted EBITDA loss of $(13) million.
  • Sales were in line with guidance ranges, while the adjusted EBITDA loss for the quarter was better than expected, said the analyst.
  • The analyst's estimates for the quarter called for revenue of $100 million and adjusted EBITDA of $(16.1) million.
  • Adjusted EBITDA results for 2022 benefitted from a focus on spending control, added the analyst.
  • The analyst said the company delivered several growth-oriented product innovations in 2022 focused on enhancing the dealer buying experience, increasing conversion rates, and expanding the TAM.
  • To improve the buyer experience, ACV delivered its marketplace 2.0 with updated filtering, search, and notification features. The analyst said that ACV's Advanced Buyer Solution (S.A.M.) enhances the buying experience through intelligent notifications and auto bidding capabilities.
  • The analyst noted that ACV's private marketplace solution gained share with large dealer groups, enabling dealers to auction inventory within their network while also leveraging ACV's open marketplace for unsold units.
  • The company expanded its TAM with the acquisitions of Drivably and Monk, enabling dealers to transform their consumer sourcing experience with digital solutions powered by machine learning and data.
  • In 2023, ACV's primary focus on innovation will further enhance and leverage the company's vehicle intelligence platform powered by AI and machine learning in conjunction with the company's broad and growing data repository, said the analyst.
  • Price Action: ACVA shares are trading lower by 4.85% at $12.06 on the last check Friday.
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