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Investing.com - Benchmark maintained its Buy rating and $400.00 price target on Lithia Motors (NYSE:LAD) as Amazon (NASDAQ:AMZN) continues expanding its automotive marketplace presence.
Amazon launched Amazon Autos this summer, partnering with Hyundai (OTC:HYMTF) to enable customers to purchase new vehicles through its platform across approximately 70 markets, acting as a listing agent between buyers and participating dealerships rather than selling cars directly.
The e-commerce giant has also entered the used car market, recently announcing a partnership with Hertz (NASDAQ:HTZ) that allows customers within 75 miles of Dallas, Houston, Los Angeles, and Seattle to search for and purchase used vehicles on Amazon.com, with plans to expand to 45 locations nationwide.
Hertz stock jumped over 6% following the partnership announcement, while franchised dealers including Lithia Motors (NYSE:LAD), Penske Automotive Group (NYSE:PAG), Sonic Automotive (NYSE:SAH), and Group 1 Automotive (NYSE:GPI) remained flat.
Digital used car retailers like CarMax (NYSE:KMX) and Carvana (NYSE:CVNA) experienced low single-digit percentage declines as Amazon’s automotive marketplace expansion potentially threatens their business models. CarMax, currently trading at $57.89 near its 52-week low of $54.53, operates with challenging gross profit margins of 12.5% and commands a market cap of $8.7 billion. With a P/E ratio of 16 and mixed analyst recommendations, the stock appears undervalued according to InvestingPro analysis, which offers comprehensive valuation metrics and 11 additional proprietary insights for subscribers.
In other recent news, CarMax has seen a variety of analyst actions following its latest financial results. The company delivered a stronger-than-anticipated fiscal first-quarter performance, prompting Mizuho (NYSE:MFG) to raise its earnings estimates for the used car retailer, although they lowered the stock price target to $78 while maintaining a Neutral rating. RBC Capital also responded to CarMax’s results by raising its price target to $81, citing "notable upside surprises" in used unit comparable sales and gross profit metrics, and maintained an Outperform rating. Truist Securities adjusted its price target to $74, acknowledging CarMax’s "solid" first-quarter performance with an 8.1% increase in used unit comparable sales, and kept a Hold rating.
Additionally, Evercore ISI reiterated an Outperform rating with a price target of $85, emphasizing CarMax’s potential to gain market share through its expansion into the older vehicle market. Morgan Stanley (NYSE:MS) assumed coverage with an Overweight rating and a price target of $80, noting CarMax’s consistent same-store growth and strong gross profit per unit. These developments reflect a mixed but generally positive outlook from analysts regarding CarMax’s recent performance and future prospects.
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