Alexander Perry, an analyst from Bank of America Securities, has initiated a new Sell rating on CarMax (KMX).
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Alexander Perry has given his Sell rating due to a combination of factors tied to weakening profitability and ongoing demand challenges. CarMax’s recent quarter showed only a modest improvement in unit trends while gross profit per vehicle fell meaningfully, driven by deliberate price cuts that weighed heavily on earnings and pushed reported EPS well below market expectations.
Looking ahead, Perry anticipates further pressure on margins as the company prioritizes volume over profit per unit, with retail GPUs expected to decline again and same-store unit volumes still facing difficult comparisons. Even with planned cost savings and strategic initiatives in pricing, marketing, and digital experience, his earnings forecasts remain reset lower, and he believes continued market share losses and unit declines do not justify the current share price, supporting a price objective below the recent trading level.
In another report released today, J.P. Morgan also maintained a Sell rating on the stock with a $35.00 price target.