CarMax: Elevated Execution Risk and Intensifying Carvana Competition Justify Sell Rating Despite New CEO

J.P. Morgan analyst Rajat Gupta CFA has maintained their bearish stance on KMX stock, giving a Sell rating today.

Rajat Gupta CFA has given his Sell rating due to a combination of factors tied to execution risk and competitive pressure, even as a new CEO is appointed. While Keith Barr brings a strong background in digital transformation and customer experience from IHG, J.P. Morgan views the operational challenges at CarMax as fundamentally more complex, involving inventory risk, credit exposure, and the need for deep cultural change across owned stores.

Gupta highlights that success in the used car space depends on mastering end-to-end inventory management, sophisticated pricing and financing, efficient logistics, and structural cost reduction at the store level, areas where CarMax must still prove meaningful progress. At the same time, Carvana is scaling rapidly, consistently growing volumes at over 40% with roughly triple the unit economics, tightening the margin for error for CarMax’s turnaround and limiting upside relative to risks, which underpins the Sell recommendation.

In another report released today, Barclays also maintained a Sell rating on the stock with a $28.00 price target.