CarMax Faces Material Affordability Challenges, Says Analyst
Portfolio Pulse from Shivani Kumaresan
Truist analyst Scot Ciccarelli maintains a Hold rating on CarMax Inc (NYSE:KMX) with a price target of $72.00. He predicts a 2% decline in Q3 FY24 used unit sales, marking the 8th consecutive quarter of declines. Gross profit estimates were lowered to $619 million from $644 million. CarMax faces affordability challenges with average selling prices 35%-40% higher than in 2019, and monthly payments increased by over 40% due to higher interest rates. Despite a modest decline in used vehicle prices, they remain above historical levels, pressuring sales trends. CarMax Auto Finance also impacts profitability negatively. CarMax will report Q3 results on December 21, 2023.
December 20, 2023 | 7:50 pm
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Truist analyst maintains a Hold rating on CarMax with a $72 price target, anticipating a decline in used unit sales and a lower gross profit estimate. Affordability challenges and high interest rates continue to pressure sales trends.
The analyst's forecast of continued declines in sales and profitability issues due to affordability challenges and high interest rates is likely to negatively impact investor sentiment in the short term, potentially leading to a decrease in stock price.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 100