CarMax’s analyst fair value target has been lowered from $57.79 to $55.50. Analysts cite continued softness in earnings, elevated loan losses, and weaker retail sales forecasts following recent quarterly results.
Analyst Commentary
Recent analyst commentary on CarMax highlights a divided outlook, with persistent concerns about operational headwinds and some calls for possible upside should execution and market factors improve.
Bullish Takeaways- Bullish analysts see potential for unit growth recovery. They note that some of the challenges, such as negative retail comps and elevated loan losses, may be tied to one-off factors in recent quarters.
- There is optimism that issues related to CarMax Auto Finance earnings are largely confined to loans originated in 2022 and 2023. This suggests potential for stabilization ahead.
- Some price targets have been raised in anticipation of improved longer-term performance. Major banks such as JPMorgan have established higher targets based on recovery scenarios in the future.
- Bullish analysts view the company as a valuable asset in the sector. They maintain ratings above neutral on expectations of eventual operational improvements and market share retention.
- Bearish analysts are concerned about continued softness in retail sales. They warn that the company’s ability to return to sustained growth is less clear following underwhelming Q2 results.
- Several have significantly reduced price targets and ratings, reflecting worries about the risk of further deterioration in both unit sales and profit margins.
- Persistent headwinds such as higher provisions for loan losses, increased depreciation, and heightened competition are prompting concerns about CarMax’s medium-term earnings power and visibility.
- Debate continues about whether current weakness reflects temporary issues or deeper, structural challenges in the business and broader macro environment. This contributes to a generally more cautious stance.
What's in the News
- Between June 1 and August 31, 2025, CarMax repurchased 2,920,959 shares, totaling $180.02 million. This brings total shares repurchased under the October 2012 authorization to 109,170,862 shares, or 58.32 percent, for $6.99 billion (Key Developments).
- CarMax, Inc. (NYSE:KMX) has been dropped from the FTSE All-World Index (USD) (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has decreased from $57.79 to $55.50, reflecting a modest downward revision in fair value estimates.
- Discount Rate remains unchanged at 12.32 percent, indicating a stable risk assessment compared to prior valuations.
- Revenue Growth projection is steady at approximately -0.30 percent, with no change to the anticipated topline trend.
- Net Profit Margin forecast holds at 3.39 percent, showing no notable movement from previous estimates.
- Future P/E ratio has slipped slightly from 10.79x to 10.52x, signaling marginally lower earnings multiple expectations.
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