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Investing.com - Mizuho (NYSE:MFG) has lowered its price target on CarMax (NYSE:KMX) to $78.00 from $80.00 while maintaining a Neutral rating on the stock. The $10.74 billion specialty retailer, currently trading at $71.57, has seen mixed signals from analysts, with InvestingPro data showing six analysts recently revising earnings estimates downward.
The price target reduction comes despite Mizuho analyst David Bellinger raising earnings estimates for the used car retailer following what he described as "a stronger than anticipated fiscal Q1 print."
Mizuho increased its fiscal year 2025 (ending February 2026) earnings estimate for CarMax to $4.10 from the previous $3.86, and raised its fiscal year 2026 estimate to $4.85 from $4.60.
The new $78 price target is based on a 16x multiple of Mizuho’s fiscal year 2026 earnings estimate, down from approximately 17.5x previously.
Mizuho attributed the multiple contraction to "continued lumpiness within quarter-to-quarter results and relative weakness vs. other players within the used vehicle space."
In other recent news, CarMax reported first-quarter results for fiscal year 2026 that surpassed Wall Street expectations. The company achieved an earnings per share (EPS) of $1.38, exceeding the forecasted $1.19, and reported revenue of $7.5 billion, slightly above the anticipated $7.54 billion. This marked a 6% increase in revenue compared to the previous year. Analysts at Morgan Stanley (NYSE:MS) have assumed coverage on CarMax with an Overweight rating, citing the company’s strong growth in same-store sales and operational leverage. RBC Capital also raised its price target for CarMax to $81 from $80, maintaining an Outperform rating, while Truist Securities increased its target to $74 from $72, keeping a Hold rating. CarMax’s first-quarter performance was highlighted by an 8.1% increase in used unit comparable sales, though challenges remain for future quarters. The company’s digital and omnichannel strategies have been pivotal in driving these positive results, with 80% of retail unit sales supported by digital capabilities. Despite these accomplishments, analysts express caution about potential macroeconomic uncertainties affecting future sales trends.
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