Royal Bank Of Canada Forecasts Strong Price Appreciation for CarMax (NYSE:KMX) Stock

Key Points

• Royal Bank of Canada raised CarMax’s price target to $56 from $45 but maintained a “sector perform” rating; the new target implies about 5.55% downside from the $59.29 share price.
• Analyst sentiment remains cautious, with a consensus “Reduce” rating and a $56.14 target price. Recent targets range from $48 to $67, reflecting significant disagreement about the stock’s outlook.
• CarMax reported a strong quarter, earning $1.16 per share versus the $0.73 consensus and generating $7.88 billion in revenue, up 19.5% year over year; expected share repurchases could provide an additional catalyst.

CarMax (NYSE:KMX - Get Free Report) had its target price increased by research analysts at Royal Bank Of Canada from $45.00 to $56.00 in a note issued to investors on Wednesday, Benzinga reports. The brokerage currently has a "sector perform" rating on the stock. Royal Bank Of Canada's price target would indicate a potential downside of 5.55% from the company's current price.

Several other brokerages have also commented on KMX. Barclays set a $67.00 target price on CarMax in a research report on Wednesday. BNP Paribas Exane reissued an "underperform" rating and set a $48.00 target price (up from $33.00) on shares of CarMax in a report on Wednesday. Robert W. Baird raised their price target on shares of CarMax from $48.00 to $55.00 and gave the stock an "outperform" rating in a research report on Thursday, June 18th. Bank of America lifted their price target on shares of CarMax from $45.00 to $50.00 and gave the company an "underperform" rating in a report on Wednesday. Finally, Wall Street Zen upgraded shares of CarMax from a "sell" rating to a "hold" rating in a research note on Saturday, June 13th. Two research analysts have rated the stock with a Buy rating, thirteen have given a Hold rating and four have issued a Sell rating to the company's stock. Based on data from MarketBeat, the company has a consensus rating of "Reduce" and a consensus price target of $56.14.

CarMax Stock Up 4.8%

Shares of NYSE:KMX opened at $59.29 on Wednesday. The firm has a market cap of $8.41 billion, a PE ratio of 38.75, a price-to-earnings-growth ratio of 1.80 and a beta of 1.17. The company has a fifty day simple moving average of $59.56 and a 200 day simple moving average of $50.20. The company has a current ratio of 2.70, a quick ratio of 0.82 and a debt-to-equity ratio of 2.87. CarMax has a 12-month low of $30.26 and a 12-month high of $65.28.

CarMax (NYSE:KMX - Get Free Report) last released its earnings results on Tuesday, September 29th. The company reported $1.16 earnings per share for the quarter, topping the consensus estimate of $0.73 by $0.43. The company had revenue of $7.88 billion during the quarter, compared to the consensus estimate of $7.09 billion. CarMax had a net margin of 0.84% and a return on equity of 6.64%. The company's revenue was up 19.5% on a year-over-year basis. During the same quarter in the previous year, the firm earned $0.64 EPS. On average, equities research analysts anticipate that CarMax will post 2.73 EPS for the current fiscal year.

Institutional Investors Weigh In On CarMax

A number of hedge funds have recently made changes to their positions in the business. Envestnet Asset Management Inc. boosted its position in shares of CarMax by 1.6% during the second quarter. Envestnet Asset Management Inc. now owns 932,805 shares of the company's stock worth $49,336,000 after buying an additional 14,976 shares during the period. State Street Corp lifted its holdings in CarMax by 5.6% in the second quarter. State Street Corp now owns 5,156,276 shares of the company's stock worth $272,715,000 after purchasing an additional 271,216 shares during the period. Anchor Investment Management LLC bought a new position in CarMax in the 2nd quarter valued at about $37,000. The Manufacturers Life Insurance Company increased its stake in CarMax by 0.9% during the 2nd quarter. The Manufacturers Life Insurance Company now owns 2,420,139 shares of the company's stock valued at $128,001,000 after buying an additional 21,882 shares during the period. Finally, Capstone Financial Advisors Inc. raised its position in shares of CarMax by 5.6% during the 2nd quarter. Capstone Financial Advisors Inc. now owns 9,500 shares of the company's stock worth $502,000 after buying an additional 500 shares in the last quarter.

Key CarMax News

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Strong earnings and revenue beat: CarMax reported adjusted earnings of $1.16 per share, versus the roughly $0.73 consensus estimate and $0.64 a year earlier. Revenue rose 19.5% to $7.88 billion, exceeding expectations by approximately $850 million. CarMax Reports Second Quarter Fiscal 2027 Results
• Positive Sentiment: Used-vehicle demand improved: Combined retail and wholesale unit sales increased 14.7%, while retail used-unit sales rose 13.8% and comparable-store used-unit sales climbed 13.0%. Management said pricing actions helped support sales, and even lower-income customers appeared relatively resilient despite affordability pressures. CarMax Says Even Its Lowest-Income Customers Are Holding Up
• Positive Sentiment: Capital returns may resume: CarMax indicated that share repurchases are expected to restart in the third quarter, providing an additional potential catalyst for the stock. CarMax Just Gave Investors a Better Reason to Believe in the Turnaround

About CarMax

CarMax, Inc is a retailer of used vehicles operating in the United States. The company sells a broad selection of used cars, trucks and SUVs through its dealership network and online platform, offering customers the ability to research, purchase and arrange delivery for vehicles through an omnichannel shopping experience.

In addition to retail vehicle sales, CarMax provides vehicle financing through CarMax Auto Finance and offers customers access to extended protection products and related services.

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