KeyBanc Starts CarMax (KMX) at Buy

KeyBanc initiates coverage on CarMax (NYSE: KMX) with a Buy rating and a price target of $62.00.

Analyst Brett D. Hoselton said, "We are initiating coverage of CarMax, Inc. (KMX-NYSE) with a BUY rating and a $62 price target based on our belief that: 1) KMX should double the low to mid-single digit used car industry CAGR outlook over the near to mid-term driven by improving supply of late model used vehicles, maturation of recently opened stores, and an aggressive pipeline of new store openings in the foreseeable future; 2) KMX’s commitment to share buybacks does not appear to be fully reflected in the Street’s earnings estimates and could provide an additional upward revision of as much as 8% to FY16 (ending February 2016) consensus estimates; and 3) the current 12-month forward P/E multiple of ~20x the Street’s FY15 estimate of $2.54 is below historical mean of 21x and we believe should continue to revert toward the historical average going forward supported by a robust sales and share buyback outlook. We are introducing our earnings estimates of $2.58 (First Call consensus $2.54) for FY15 (ending February 2015), and $2.94 (First Call consensus $2.78) for FY16 (ending February 2016)."

For an analyst ratings summary and ratings history on CarMax click here. For more ratings news on CarMax click here.

Shares of CarMax closed at $50.07 yesterday.

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