CarMax (NYSE:KMX) Gets Price Target Boost from Evercore ISI Amid Positive Q2 Results
Evercore ISI has revised its outlook on CarMax, increasing the price target to $79.00 from $76.00 with an In Line rating. The firm's update follows CarMax's second-quarter results, showing a stabilization in market share and retail profit growth.
CarMax reported a 5% growth in retail used unit sales from June to August, in line with industry performance. This growth was attributed to normalization of depreciation and advantages from software disruptions at competing dealers.
Retail profitability improved from $0.11 to $0.30 in the same quarter, but concerns over higher loan losses persist. Evercore ISI adjusted EPS estimates for fiscal years 2024 and 2025 by 1%, setting them at $3.05 and $3.60 respectively.
CFRA analysts maintained a Buy rating with a price target of $100, projecting P/E of 24.4x for fiscal year 2026. Despite a slight reduction in FY 2025 EPS estimate, FY 2026 remains at $4.10.
CarMax remains optimistic about growth prospects, testing new credit scoring models and AI systems. Despite challenges, it reported a 5.1% increase in retail unit sales in Q2 2025.
InvestingPro Insights: CarMax faces challenges in sales decline and weak profit margins, but maintains strong liquidity. Valuation metrics suggest market pricing in future growth/stability. Comprehensive analysis and tips available for informed investment decisions.
Analysis: CarMax's positive Q2 results and outlook adjustments reflect potential for market share stabilization and profitability growth. Investors should consider company challenges and industry dynamics when assessing investment opportunities.