Stephens Downgrades CarMax (KMX) to Equal Weight

Stephens analyst Daniel Imbro downgraded CarMax (NYSE: KMX) from Overweight to Equal Weight with a price target of $64.00 (from $104.00).

The analyst commented, "We are downgrading shares of KMX from OW to EW and lowering our price target from $105 to $64, based on ~16x our new FY24 EPS estimate. Used vehicle demand trends have been softening, and the update last week was largely in-line with our expectations; however, the expense backdrop is higher than anticipated, and with minimal expected improvement in the near term, it is difficult to see upside to near-term numbers even after the steep reset. At ~16.5x our new FY24 estimates, we believe valuation is less compelling given the added near-term uncertainty. Our CAF estimates slightly come down, but consensus still looks too high for this segment, especially looking out to
FY24. The company is gaining share, and we believe the investments today could make the setup attractive at some point in calendar 2023, but for now we are moving to the sidelines to await better clarity."

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 $66.02 yesterday.

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