CarMax Share Price Target Cut After Q3 ‘Well Below’ Consensus

CarMax’s (NYSE: KMX) share price target has been cut by analysts at BofA, Baird, and Stephens on Friday, following the company’s fiscal third-quarter results released yesterday.

The company posted a big earnings per share miss, coming in at $0.24 compared to the $0.70 consensus estimate, while revenue was $6.5 billion, also significantly below the $7.28 billion expected by analysts.

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Meanwhile, combined retail and wholesale used vehicle unit sales were 298,807, a fall of 28% from the prior year period.

CarMax shares fell more than 3% in Thursday’s session.

The results led to BofA analyst John Murphy cutting the firm’s price target on CarMax to $49 from $100, maintaining an Underperform rating on the stock. The analyst told investors in a note that CarMax’s Q3 results were “well below” consensus due to a significant decline in same-store unit sales, weaker performance from its auto finance unit, and “tough market dynamics.”

Meanwhile, Baird analyst Craig Kennison reduced the firm’s price target on CarMax to $65 from $82, keeping an Outperform rating on the stock. Kennison said the company reported disappointing results as car buyers face higher prices and rising rates. However, although he said he got CarMax wrong in 2022, he feels it is too late to downgrade and expects affordability to improve in 2023.

Finally, Stephens analyst Daniel Imbro lowered the price target on CarMax to $53 from $64. The analyst kept an Equal Weight rating on the shares and stated that the company’s EPS was negatively impacted by lower volumes and elevated SG&A expense. He added that CarMax lost market share towards the end of the quarter due to competitors’ pricing actions.