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Evercore ISI lowered its price target on CarMax stock (NYSE:KMX) to $80.00 from $84.00 on Monday, while maintaining an Outperform rating on the shares. The firm cited concerns about declining comparable sales in May and June following a pre-tariff demand surge in March and April. According to InvestingPro data, CarMax is currently trading near its 52-week low of $61.34, with analyst targets ranging from $55 to $118.
The research firm reduced its first-quarter comparable sales estimate to 5% versus the Street’s 6% based on its analysis of retail used units sold. Evercore now projects earnings per share three cents below consensus, bringing its full-year EPS estimate to $3.65. With a current P/E ratio of 21.67 and trailing twelve-month revenue of $28.2 billion, InvestingPro analysis indicates the stock is trading at a premium relative to its near-term earnings growth potential.
CarMax shares have fallen 17% since its fourth-quarter earnings release on April 10, compared to the S&P 500’s 10% gain during the same period. The company is scheduled to report its first-quarter results (covering March-May) before market open on June 20.
Evercore also cut its second-quarter retail used unit comparable sales forecast to 2.3% versus the Street’s 2.7%, accounting for an expected low-single-digit June comparable sales decline resulting from tariffs and CDK disruption cycle effects.
The firm described CarMax’s risk-reward profile as "intriguing" in the $60s price range, outlining a bear case with downside to below $50 and a bull case with upside potential to over $120 based on normalized earnings per share of $5.50+ at a low 20s multiple.
In other recent news, CarMax reported a fourth-quarter earnings per share (EPS) of $0.58, which, despite being an 81% increase year-over-year, fell short of the consensus estimate of $0.66. The shortfall was partially attributed to a non-cash impairment charge related to the Edmunds lease. The company saw a 5.1% increase in retail used unit comparable sales, although this was below the anticipated 6.4%. Analysts from Evercore ISI, RBC Capital, and Needham have adjusted their price targets for CarMax, with Evercore ISI maintaining a $100 target, RBC Capital lowering it to $80, and Needham setting it at $92. Despite the mixed analyst ratings, CarMax’s operational performance has been noted for its improvements, including a 14% growth in gross profit and enhanced efficiency ratios. CarMax’s partnership with Gotham FC has been renewed, focusing on community engagement and enhancing fan experiences. The company continues to invest in digital content and youth soccer initiatives as part of this collaboration. These developments reflect CarMax’s ongoing efforts to strengthen its market position amidst broader economic uncertainties.
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