J.P. Morgan analyst Rajat Gupta CFA has maintained their neutral stance on KMX stock, giving a Hold rating on September 16.
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Rajat Gupta CFA has given his Hold rating due to a combination of factors impacting CarMax’s current market position and future prospects. The company has faced challenges with its earnings, primarily due to underwhelming execution in strategic initiatives such as sourcing older cars and leveraging omni-channel investments. Despite an increase in store count and online penetration, CarMax has not achieved significant market share gains, with total company units declining since 2019.
Additionally, CarMax’s performance in its financing arm, CAF, has been volatile and less competitive compared to peers, contributing to the overall pressure on earnings. The resurgence of competitors like Carvana, with stronger growth and unit economics, has further intensified the competitive landscape. While there is potential for modest recovery in the supply of used cars and support from share buybacks, the company still faces significant hurdles in regaining investor confidence and improving its market position. As a result, shares are expected to remain within a certain range, leading to the Hold rating.
According to TipRanks, Gupta CFA is a 5-star analyst with an average return of 15.5% and a 59.46% success rate. Gupta CFA covers the Consumer Cyclical sector, focusing on stocks such as Asbury, AutoNation, and CarMax.
In another report released on September 16, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $66.00 price target.