CarMax (KMX) Stock Continues to Slide on Guggenheim Downgrade to Neutral, Other Analysts More Positive as Supply Chain Issues Seen as Transitory

October 1, 2021 10:44 AM EDT
Get Alerts KMX Hot Sheet
Price: $143.43 +1.08%

Rating Summary:
    18 Buy, 11 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 16 | Down: 18 | New: 32
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Shares of CarMax (NYSE: KMX) are down over 3% in today’s trading session after the company missed the Q2 EPS consensus estimates.

EPS came in at $1.72 to miss on the Street estimate of $1.90. Revenue came in at $8 billion to beat the $6.9 billion consensus.

Guggenheim analyst Ali-Ahmad Faghri downgraded CarMax to Neutral from Buy to send shares further lower today.

Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and a $165.00 per share price target despite a “rare miss.”

“While CVNA remains our preferred used car name, we think KMX has the network capability to be a strong challenger to CVNA over the long run and can deliver strong returns to investors. However, in the short-term we believe investors will need to contend with a slowdown in sales, normalization of pricing and potential stabilizing in GPUs, alongside increased investment in boosting its omni offerings via: hiring staff, building a more robust logistics network, improving its website, collecting data, procuring more inventory and ramping advertising spend across markets,” the analyst said in a client note.

Wolfe Research analyst Greg Badishkanian assumed the research coverage on CarMax with an Outperform rating and a price target of $160.00 as supply headwinds are seen as “largely transitory."

“KMX delivered Q2 results earlier today in which used unit comps rose +6.2% yet shares contracted more than (12%) in an edgy retail tape given ongoing supply headwinds and a more limited flowthrough to the bottom line. We see these issues as largely transitory and the pullback in shares as an attractive entry point. KMX has now largely moved beyond the heavy lifting phase of its protracted, digital investment period and is well positioned to accelerate share gains and push towards a targeted 2M annual unit goal. Strong and steady cash flow generation should support a larger buyback program as EPS gravitates closer to $8 over the medium-term,” Badishkanian added.

CarMax stock price closed 12.6% in the red yesterday.

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