Morgan Stanley Issues Positive Forecast for CarMax (NYSE:KMX) Stock Price

Key Points

• Morgan Stanley raised CarMax’s price target from $44 to $47 but maintained an “equal weight” rating, implying roughly 17% downside from the prior close.
• Analyst sentiment remains cautious: CarMax has a consensus “Reduce” rating and an average price target of $51.87, with most analysts assigning Hold ratings.
• CarMax is cutting 145 corporate jobs—about 4% of its corporate workforce—as it seeks to reduce costs, but repeated layoffs and a soft auto market highlight ongoing operational and recovery risks.

CarMax (NYSE:KMX - Get Free Report) had its price objective raised by equities research analysts at Morgan Stanley from $44.00 to $47.00 in a research report issued to clients and investors on Wednesday, Benzinga reports. The firm presently has an "equal weight" rating on the stock. Morgan Stanley's target price suggests a potential downside of 17.21% from the company's previous close.

Several other analysts have also issued reports on KMX. Benchmark reiterated a "hold" rating on shares of CarMax in a report on Thursday, June 18th. Bank of America raised their price target on CarMax from $40.00 to $45.00 and gave the company an "underperform" rating in a research note on Wednesday, June 17th. Royal Bank Of Canada upped their price objective on CarMax from $41.00 to $45.00 and gave the stock a "sector perform" rating in a research note on Thursday, June 18th. Barclays raised CarMax from an "underweight" rating to an "equal weight" rating and increased their price objective for the company from $37.00 to $61.00 in a report on Tuesday, July 21st. Finally, JPMorgan Chase & Co. boosted their target price on shares of CarMax from $60.00 to $70.00 and gave the stock a "neutral" rating in a report on Friday, September 18th. Two analysts have rated the stock with a Buy rating, fourteen have assigned a Hold rating and four have given a Sell rating to the company's stock. Based on data from MarketBeat.com, the stock presently has a consensus rating of "Reduce" and an average price target of $51.87.

CarMax Trading Down 1.9%

Shares of NYSE:KMX opened at $56.77 on Wednesday. The company's 50-day moving average price is $59.58 and its two-hundred day moving average price is $49.66. CarMax has a one year low of $30.26 and a one year high of $65.28. The company has a debt-to-equity ratio of 2.87, a current ratio of 2.70 and a quick ratio of 0.82. The stock has a market capitalization of $8.06 billion, a PE ratio of 37.10, a price-to-earnings-growth ratio of 2.67 and a beta of 1.17.

Insider Transactions at CarMax

In related news, Director Sona Chawla acquired 2,000 shares of CarMax stock in a transaction on Thursday, June 25th. The stock was purchased at an average cost of $53.39 per share, with a total value of $106,780.00. Following the completion of the transaction, the director directly owned 21,702 shares in the company, valued at $1,158,669.78. This trade represents a 10.15% increase in their position. The purchase was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. 1.01% of the stock is owned by corporate insiders.

Institutional Trading of CarMax

Hedge funds have recently modified their holdings of the stock. Global Retirement Partners LLC bought a new position in CarMax in the second quarter valued at about $29,000. Basecamp Wealth Advisors LLC lifted its holdings in shares of CarMax by 105.8% in the first quarter. Basecamp Wealth Advisors LLC now owns 636 shares of the company's stock worth $26,000 after acquiring an additional 327 shares during the last quarter. Huntington National Bank boosted its stake in shares of CarMax by 62.4% in the 4th quarter. Huntington National Bank now owns 690 shares of the company's stock valued at $27,000 after purchasing an additional 265 shares in the last quarter. Anchor Investment Management LLC acquired a new stake in shares of CarMax in the 2nd quarter valued at approximately $37,000. Finally, Wellington Grp LLC grew its holdings in shares of CarMax by 6,500.0% during the 1st quarter. Wellington Grp LLC now owns 726 shares of the company's stock valued at $30,000 after purchasing an additional 715 shares during the last quarter.

Key CarMax News

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: CarMax is eliminating 145 corporate positions, approximately 4% of its corporate workforce, as part of a plan to operate more efficiently and “run leaner.” Investors may view the cuts as a way to reduce expenses and support the company’s turnaround. CarMax Cuts 145 Corporate Jobs in Third Layoff Round in 11 Months
• Neutral Sentiment: Wall Street expects CarMax’s upcoming quarterly results to show year-over-year growth, with projected earnings of about $0.70 per share and revenue of approximately $6.94 billion. However, recent analyst estimates and price targets have been mixed, and the stock has largely received neutral ratings. Top Wall Street Forecasters Revamp CarMax Expectations Ahead of Q2 Earnings
• Negative Sentiment: CarMax’s third round of corporate layoffs in roughly 11 months underscores ongoing weakness in the auto market and concern about operating conditions. While the cuts may lower costs, repeated workforce reductions could signal that management expects a prolonged recovery. CarMax Cuts Jobs for Third Time in 12 Months Amid Soft Auto Market
• Negative Sentiment: Zacks said CarMax does not currently have the combination of factors that typically supports an earnings beat, increasing the risk of a disappointing report or cautious outlook. CarMax Earnings Expected to Grow
• Negative Sentiment: Bernstein Liebhard announced an investigation into potential breaches of fiduciary duty by certain CarMax directors and officers. The inquiry does not establish wrongdoing, but it adds legal and governance uncertainty that may weigh on investor sentiment. CarMax Shareholder Investigation Alert

CarMax Company Profile

CarMax, Inc is a specialty retailer of used vehicles and one of the largest automotive retailers in the United States. The company sells a broad selection of used cars, trucks and sport utility vehicles through its retail locations and online platform. CarMax also purchases vehicles from consumers and other sources, providing customers with a streamlined alternative to traditional private-party sales.

In addition to retail sales, CarMax operates wholesale vehicle auctions for vehicles that do not meet its retail standards or business requirements.

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