CarMax (KMX – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst John Murphy from Bank of America Securities maintained a Sell rating on the stock and has a $60.00 price target.
John Murphy’s rating is based on several key considerations. Despite CarMax’s solid performance in same-store sales and gross profit, the company faces challenges due to a persistent shortage of late-model used vehicles, which is expected to continue into 2025. This shortage could limit growth opportunities and put pressure on CarMax’s ability to maintain its current sales momentum.
Additionally, while CarMax’s gross profit per unit remains near record levels, the company’s operating expenses, specifically selling, general, and administrative costs, were slightly higher than anticipated. This has resulted in a less favorable operating margin. Furthermore, competitive pressures from both franchised dealers and companies like Carvana are increasing, which may compel CarMax to shift towards older, lower-priced vehicles to sustain sales, potentially impacting profitability. These factors contribute to John Murphy’s decision to maintain a Sell rating on CarMax’s stock.
In another report released on April 1, J.P. Morgan also maintained a Sell rating on the stock with a $65.00 price target.
KMX’s price has also changed slightly for the past six months – from $71.110 to $66.450, which is a -6.55% drop .