Analyst Daniela Haigian of Morgan Stanley maintained a Buy rating on CarMax, retaining the price target of $80.00.
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Daniela Haigian’s rating is based on several positive indicators for CarMax’s future performance. The company has demonstrated four consecutive quarters of volume growth, which supports the viability of its business model and suggests potential for continued success. This growth has been driven by CarMax’s omnichannel strategy, which has enabled mid-single-digit percentage sales growth and translated into mid-teens earnings per share (EPS) growth. Additionally, there are opportunities to enhance unit economics and stabilize volume growth through initiatives like large-scale reconditioning centers and increased sourcing from dealers and consumers.
Another factor influencing the Buy rating is CarMax’s strategic shift in vehicle mix, which positions the company to capture more market share. The recent focus on both lower and higher-priced used cars is seen as a necessary move to expand market presence. Although communication around this strategy could have been clearer, initial feedback from dealers supports the company’s approach to selling more older model vehicles through retail channels rather than auctions. This shift is expected to enhance profitability by leveraging older inventory more effectively.
Based on the recent corporate insider activity of 56 insiders, corporate insider sentiment is neutral on the stock.