After Meetings With Management, Stifel Says "State Of CarMax Union Is Strong"

In a report published Wednesday morning, Stifel analyst James Albertine commented onCarMax Inc KMX, after a few investor meetings with the company’s management. Albertine said to be “encouraged by management's humility, in a sense, to constantly refine existing programs and to dial-back pilot

programs when results appear insufficient to merit further investment.”

Stifel maintains a Buy and a $71 price target on the stock, which currently trades below $63.

 

Growth Thesis

 

According to the report, Stifel believes that the CarMax “growth thesis is on track, as results from existing site renovations (front of store only at this point at 6-7 locations) and small store format roll-outs (we count 5 to date) meeting or exceeding management expectations.” While the firm’s analysts consider that “updated technologies and strategic operational changes (i.e. add'l workstations, structural modifications, personnel relocation within stores) will help improve customer conversion rates,” they also suspect that “small store format techniques will also yield material expense leverage when strategically applied to larger format stores.”

The Wall Street research firm also pointed out the potential of online wholesale auctions, especially for the longer term.

 

Bullishness Throughout

 

Other important research firms and investors are also bullish on CarMax. Last week, Oppenheimer named it amongst its top stock picks going into this earnings season and, a week earlier, Jim Cramer recommended the stock on CNBC's Mad Money, as used cars with bad gas mileage are more attractive when gasoline is cheap.

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Posted In: Analyst ColorCNBCLong IdeasNewsJim CramerPrice TargetRetail SalesAnalyst RatingsMediaTrading IdeasCNBCJames AlbertineJim CramerMad MoneyOppenheimerStifel
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