CarMax Stock Rises 5% as Mizuho Stays Neutral | Q3 Performance Analysis
In a recent development, Mizuho has maintained its Neutral stance on CarMax (NYSE:) with a price target of $72.00. The automotive retailer experienced a significant turnaround, with its stock closing up 5% despite initial pre-market concerns. This shift in investor sentiment can be attributed to CarMax's sustained sales momentum through September and signs of potential market share recovery.
However, CarMax's third-quarter performance has been a mix of challenges and positive developments. Mizuho's analysis suggests that used-unit comparable sales may be slightly below 4% once the impact of an unfavorable day mix is factored in. Currently, comparable sales are estimated to be in the low single-digit percentage range. Additionally, CarMax has adjusted its loss provision by about $52 million for existing loans, significantly higher than the typical range of $20 million to $25 million.
While CarMax management remains confident in achieving positive comparable sales and anticipates SG&A leverage in the second half of fiscal year 2024, Mizuho is cautious about fully endorsing a fundamental recovery due to increasing credit pressures. More insights into CarMax's strategy and financial outlook are expected to be shared during the company's investor day in mid-October.
In other recent news, following mixed second-quarter results, RBC Capital Markets raised its price target for CarMax to $82 from $75, maintaining an Outperform rating. Evercore ISI also increased its price target to $79 from $76, expressing concerns about higher loan losses tightening credit conditions. CFRA analyst Garrett Nelson maintained a Buy rating with a price target of $100.
In summary, CarMax's performance in the third quarter has been a mix of challenges and positive developments, with some analysts expressing caution about the company's fundamental recovery. Investors should stay tuned for more insights during the upcoming investor day to understand how CarMax plans to navigate current market conditions.
This article provides a detailed analysis of CarMax's recent performance, market sentiment, and analyst ratings. Understanding these factors can help investors make informed decisions about their investments in CarMax stock.