Deutsche Bank Upgrades CarMax (KMX) to Buy
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Deutsche Bank upgraded CarMax (NYSE: KMX) from Hold to Buy with a price target of $68.00 (from $66.00). Analyst Rod Lache thinks the company will benefit from a structural shift in the affordability of used vs new vehicles.
"A number of positives for the New Vehicle market are likely to become less favorable. Regulatory content on new vehicles will be going up. Used vehicles values are falling. And credit terms aren’t likely to get any better. We’ve discussed how this is a headwind for OEMs and Cyclical Suppliers. But we also believe that KMX should be a net winner. KMX has consistently outperformed during industry plateaus and declines. We believe that the divergence may be even more acute during this cycle, because the New mkt slowdown will likely be driven by a shift to Used. We believe KMX presents a unique investment trading at just 13.3x fwd EPS," said the analyst.
Shares of CarMax closed at $50.05 yesterday.
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