Skip to main content

Market Overview

CarMax Analyst Raises Price Target After Strong Q1, But Says Comp Growth Could Slow

CarMax Analyst Raises Price Target After Strong Q1, But Says Comp Growth Could Slow

Although CarMax, Inc (NYSE: KMX) delivered its strongest comps since 2013 in its first-quarter report Friday, the majority of the performance was driven by temporary catalysts, according to Wedbush.

The Analyst

Seth Basham maintained a Neutral rating on CarMax and raised the price target from $65 to $80.

The Thesis

CarMax reported first-quarter results that were ahead of expectations, with 9.5% comps versus the consensus estimate of 5%, Basham said in a Monday note. (See his track record here.) 

Comps accelerated significantly during the quarter, and the company cited strong conversion and favorable growth in web traffic as the reasons for the robust performance, the analyst said.

Although execution did boost comps, this was not the driving force in the quarter, as transitory factors were contributing to the ramp, he said. 

These factors include a shift of tax refunds from the fourth to first quarter; increased lending to customers with lower-quality credit; and a widening gap between new and used vehicle prices, Basham said. 

CarMax also indicated an increase in overall auction supply, which benefited sales and led to a decline in the company’s “self-sufficiency ratio," the analyst said. 

Wedbush raised its 2019 and 2020 EPS estimates from $5.12 to $5.24 and from $5.60 to $5.71, respectively, to reflect Friday's earnings report.

Comps could slow going forward, Basham said. 

Price Action

CarMax shares were down 3.14% at $82.95 at the time of publication Monday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For June 24, 2019

68 Biggest Movers From Friday

Latest Ratings for KMX

Feb 2021WedbushMaintainsOutperform
Dec 2020Morgan StanleyMaintainsOverweight
Dec 2020JP MorganDowngradesOverweightNeutral

View More Analyst Ratings for KMX
View the Latest Analyst Ratings


Related Articles (KMX)

View Comments and Join the Discussion!

Posted-In: Seth Basham WedbushAnalyst Color Earnings News Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

FSRMorgan StanleyMaintains40.0
MEDDA DavidsonMaintains302.0
VICRBWS FinancialMaintains120.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at