Analyst Chris Pierce of Needham reiterated a Buy rating on CarMax (KMX – Research Report), retaining the price target of $92.00.
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Chris Pierce’s rating is based on CarMax’s strong quarterly performance and strategic initiatives. The company reported impressive comparable sales and record retail gross profit per unit, indicating effective execution and the initial success of its omni-channel model. Additionally, CarMax Auto Finance is showing stability with loan loss provisions aligning with expectations, and there is potential for growth as the company cautiously expands into sub-prime lending while utilizing new loan buyers.
Management’s confidence in achieving durable market share gains and unit sales growth further supports the Buy rating. The stock’s valuation remains attractive, with the current price not fully reflecting the company’s projected earnings growth. The $92 target price is set at a multiple of 10 times the projected FY27 adjusted EBITDA, offering a margin of safety compared to higher-growth peers, especially as concerns about an economic slowdown persist.
According to TipRanks, Pierce is an analyst with an average return of -11.4% and a 41.81% success rate. Pierce covers the Consumer Cyclical sector, focusing on stocks such as CarMax, Blue Bird, and EVgo.