CarMax (NYSE:KMX) Shares Gap Up Following Analyst Upgrade

Key Points

• Bank of America upgraded CarMax from “Underperform” to “Buy” and set a $65 price target, sending shares up from a prior close of $49.82 to an opening price of $52.11.
• Despite the upgrade, analyst sentiment remains mostly cautious: 14 analysts rate CarMax “Hold,” compared with three “Buy” and two “Sell” ratings, while the average price target is $57.85.
• CarMax reported stronger-than-expected quarterly results, with EPS of $1.16 versus the $0.73 consensus estimate and revenue of $7.88 billion, up 19.5% year over year.

CarMax, Inc. (NYSE:KMX - Get Free Report)'s share price gapped up prior to trading on Thursday after Bank of America upgraded the stock from an underperform rating to a buy rating. The stock had previously closed at $49.82, but opened at $52.11. Bank of America now has a $65.00 price target on the stock. CarMax shares last traded at $51.63, with a volume of 465,548 shares.

Other equities research analysts have also recently issued reports about the stock. Morgan Stanley increased their price objective on shares of CarMax from $47.00 to $53.00 and gave the stock an "equal weight" rating in a research report on Wednesday, September 30th. Zacks Research lowered shares of CarMax from a "strong-buy" rating to a "hold" rating in a report on Wednesday, September 16th. Barclays boosted their target price on shares of CarMax from $61.00 to $67.00 and gave the company an "equal weight" rating in a report on Wednesday, September 30th. Mizuho upped their price target on shares of CarMax from $38.00 to $43.00 and gave the company a "neutral" rating in a research report on Thursday, June 18th. Finally, Truist Financial upped their price target on shares of CarMax from $50.00 to $60.00 and gave the company a "hold" rating in a research report on Wednesday, September 30th. Three investment analysts have rated the stock with a Buy rating, fourteen have issued a Hold rating and two have issued a Sell rating to the stock. Based on data from MarketBeat, the stock currently has an average rating of "Hold" and an average target price of $57.85.

Key Stories Impacting CarMax

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Bank of America upgraded CarMax from “Underperform” to “Buy” and assigned a $65 price target, implying substantial upside from recent levels. The upgrade is likely the biggest catalyst for the stock’s advance, signaling improved confidence in CarMax’s earnings outlook and valuation.
• Positive Sentiment: Zacks Research raised its CarMax earnings forecasts across several future periods. Estimates increased to $3.39 per share for fiscal 2027, $3.68 for fiscal 2028 and $4.25 for fiscal 2029, compared with previous estimates of $2.54, $2.71 and $2.91, respectively. Quarterly estimates were also raised, including fiscal 2028 first-quarter EPS to $1.21 from $0.95 and fiscal 2029 second-quarter EPS to $1.16 from $0.73. The revisions suggest analysts expect improving profitability over the next several years.
• Positive Sentiment: CarMax was added to multiple Zacks “Strong Buy” lists for October 15, including the overall Zacks Rank #1 list and its list of best-value stocks. New Strong Buy Stocks for October 15th
• Neutral Sentiment: Despite the higher forecasts, Zacks Research maintains a “Hold” rating, indicating that its earnings optimism has not yet translated into a formal bullish recommendation. The current-year consensus EPS estimate remains $3.01.

Institutional Inflows and Outflows

Institutional investors have recently modified their holdings of the stock. State Street Corp lifted its stake in CarMax by 5.6% during the 2nd quarter. State Street Corp now owns 5,156,276 shares of the company's stock valued at $272,715,000 after acquiring an additional 271,216 shares in the last quarter. Jupiter Topco LLC purchased a new position in CarMax during the 2nd quarter worth $245,676,000. Primecap Management Co. CA purchased a new position in CarMax during the 2nd quarter worth $230,548,000. Janus Henderson Group PLC boosted its holdings in CarMax by 1.1% during the 1st quarter. Janus Henderson Group PLC now owns 4,580,807 shares of the company's stock worth $190,471,000 after acquiring an additional 49,987 shares during the last quarter. Finally, Dimensional Fund Advisors LP grew its stake in shares of CarMax by 7.3% in the 1st quarter. Dimensional Fund Advisors LP now owns 4,275,663 shares of the company's stock worth $177,767,000 after acquiring an additional 289,768 shares in the last quarter.

CarMax Stock Performance

The company has a debt-to-equity ratio of 2.66, a quick ratio of 0.57 and a current ratio of 2.33. The stock has a market cap of $7.32 billion, a P/E ratio of 25.17, a price-to-earnings-growth ratio of 1.47 and a beta of 1.23. The company's 50 day moving average price is $58.53 and its 200-day moving average price is $51.08.

CarMax (NYSE:KMX - Get Free Report) last announced its earnings results on Tuesday, September 29th. The company reported $1.16 EPS for the quarter, beating the consensus estimate of $0.73 by $0.43. CarMax had a net margin of 1.06% and a return on equity of 7.76%. The company had revenue of $7.88 billion during the quarter, compared to the consensus estimate of $7.09 billion. During the same quarter in the prior year, the company posted $0.64 earnings per share. The firm's revenue for the quarter was up 19.5% on a year-over-year basis. Equities analysts forecast that CarMax, Inc. will post 3.01 EPS for the current fiscal year.

CarMax Company Profile

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.