Truist raises CarMax stock price target to $70 on modest gains By Investing.com

Monday – Truist Securities has adjusted its price target for CarMax (NYSE:) shares, increasing it to $70.00 from the previous $66.00, while keeping a Hold rating on the stock. The firm’s assessment follows CarMax’s first quarter performance, which met the subdued expectations set by both the analyst and investors.

The report noted a slight improvement in affordability, with average selling prices (ASPs) decreasing by approximately 3%. However, CarMax still faces headwinds in sales trends, as used unit comparable sales dipped around 4%, and sales per store are trailing approximately 15% behind 2019 levels.

The management at CarMax indicated that market share remained relatively stable year-over-year within the quarter. Despite this, concerns persist regarding the company’s market share, with potential issues stemming from non-competitive pricing, whether real or perceived and possible shifts in consumer buying behavior and product mix. These factors contribute to the challenges CarMax faces in gaining market share.

The extended timeline for a sales recovery at CarMax is a key point highlighted by Truist Securities. The slow pace at which sales are picking up is a significant factor in the firm’s decision to maintain a Hold rating on CarMax’s stock.

The adjustment in CarMax’s price target to $70.00 from $66.00 is based on current market dynamics and the company’s recent performance. Truist Securities underlines the importance of market share stability and the impact of sales trends on the future growth of CarMax, but at this time, suggests a cautious approach to the stock, as indicated by the Hold rating.

In other recent news, CarMax has been the focus of several noteworthy developments. RBC Capital Markets has revised its outlook on the company, raising its price target to $75 while maintaining an Outperform rating. This adjustment reflects expectations for CarMax’s earnings per share (EPS) to stabilize, with projections set at $2.95 for fiscal year 2025 and $4.04 for fiscal year 2026.

CarMax’s Q1 Fiscal Year 2025 results showed mixed performance. Total sales for the period reached $7.1 billion, marking a 7% decrease from the previous year. Despite this, CarMax Auto Finance income saw a 7% year-over-year increase, and used-saleable inventory units grew by 5%.

The company also reported strategic initiatives aimed at fostering future growth, such as broadening vehicle sourcing capabilities, launching in new markets, and implementing cost-saving measures. Additionally, CarMax repurchased over $100 million in shares and settled a $300 million debt, indicating active cost management.

These are recent developments that investors should note.

InvestingPro Insights

In light of CarMax’s (NYSE:KMX) latest performance and market activities, insights from InvestingPro provide additional context to the company’s financial health and future prospects. According to real-time data, CarMax has a market capitalization of $11.2 billion and is trading at a price-to-earnings (P/E) ratio of 28.11, reflecting investor expectations for future earnings growth. The P/E ratio has adjusted slightly downward from its last twelve months as of Q1 2025, sitting at 24.98, which may suggest a more favorable valuation for prospective investors.

InvestingPro Tips indicate that CarMax is a prominent player in the Specialty Retail industry, yet analysts have flagged concerns such as a potential sales decline in the current year and weak gross profit margins, which stand at 11.79% for the last twelve months as of Q1 2025. These factors may be contributing to the stock’s recent volatility, with a 1-month price total return of 2.5% but a more substantial 3-month price total return drop of -16.25%.

Despite these challenges, CarMax’s liquid assets exceed its short-term obligations, which may provide some financial stability in the near term. Furthermore, analysts predict the company will be profitable this year, with a basic and diluted EPS (Continuing Operations) of $2.55 for the last twelve months as of Q1 2025.

Investors interested in a deeper analysis of CarMax, including additional InvestingPro Tips, can explore the full suite of insights available at InvestingPro. There are 11 additional tips listed on the platform that could provide further guidance on CarMax’s potential. For those considering an InvestingPro subscription, using the coupon code PRONEWS24 grants an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

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