CarMax (NYSE: KMX) Price Target Increased to $79.00 by Evercore ISI After Positive Q2 Results
In a recent update, Evercore ISI raised its price target for CarMax to $79.00, up from $76.00, while maintaining an In Line rating. This adjustment follows CarMax's second-quarter results, which showed a stabilization in market share and retail profit growth.
CarMax reported a 5% increase in retail used unit sales from June to August, aligning with industry performance. This growth was attributed to normalized depreciation and software disruptions benefiting CarMax over competing dealers.
Retail profitability also improved, with second-quarter earnings rising from $0.11 to $0.30. Despite these gains, concerns remain about higher loan losses impacting CarMax's financial stability.
Evercore ISI adjusted CarMax's EPS estimates for fiscal years 2024 and 2025, expecting 2.5% comparable sales growth in the third quarter. The firm anticipates gradual market share stabilization and improved profitability.
CFRA analysts maintained a Buy rating on CarMax with a $100 price target for FY 2026. Despite challenges, CarMax's financial health remains strong, with plans for growth in logistics and AI systems.
InvestingPro Insights: Analysts caution a potential sales decline and weak margins for CarMax. However, the company's liquidity and industry position remain robust. Investors should consider the high valuation multiples and lack of dividends when evaluating CarMax as an investment.
In conclusion, while CarMax shows promise with market share growth and improved profitability, potential challenges like loan losses and industry pressures could impact its financial performance. Investors should closely monitor these factors and consider the company's position within the automotive retail sector.
