CarMax Bad News May Be 'Priced In'; Oppenheimer Upgrades To Outperform

CarMax, Inc KMX was upgraded to Outperform from a "Market Perform" rating by Oppenheimer in its research report released on Tuesday. The equities brokerage firm has a $60.00 target price on CarMax.

Shares of CarMax are presently trading at 47.23 on Tuesday.

Oppenheimer's forecast is positive that it will normalize over the next few quarters on the company's pricing for late model used vehicles in the truck/SUV segment comparisons ease.

"We are optimistic that over the next several quarters, as pricing for late model used vehicles in the truck/SUV market normalizes and as comparisons ease, used car unit comps at KMX will rebound to levels more reflective of the underlying strength of the company's business model," the firm commented.

CarMax is aggressively buying back equity.

"More than $1.5B remains outstanding on the buyback authorization that KMX introduced in Oct. 2014. The company tends to repurchase stock more aggressively on dips. By FY17 (Feb. 2018), cumulative buybacks since 2014 should account for about 20 percent of EPS," Oppenheimer noted.

The company's stock has a 50 day moving average price of $55.12 and its 200-day moving average price is $59.55. CarMax 52 week low is of $46.18 with a 52 week high of $75.40.

CarMax has a market cap of $9.20 billion and a PE ratio of 15.73.