CarMax stock price target raised to $81 from $80 at RBC Capital

Investing.com - RBC Capital raised its price target on CarMax (NYSE:KMX) to $81.00 from $80.00 on Monday, while maintaining an Outperform rating on the auto retailer’s shares. According to InvestingPro data, analyst targets for CarMax range from $51 to $120, with the stock currently trading at $65.27.

The price target adjustment follows what RBC described as "better than feared results" from CarMax, with the firm highlighting "notable upside surprises" in both used unit comparable sales and gross profit metrics. InvestingPro analysis indicates the company is currently undervalued, though it faces challenges with a gross profit margin of 12.47%.

Despite the positive momentum, RBC expressed some caution regarding the sustainability of current comparable sales trends, citing macroeconomic uncertainty that could impact consumer spending on vehicles.

RBC Capital adjusted its financial projections for CarMax, now modeling net sales growth of 1.9% for 2025 and 3.9% for 2026, down from previous estimates of 2.6% and 5.3%, respectively. The firm also revised its adjusted earnings per share forecasts to $3.88 for 2025 and $4.52 for 2026.

The new $81 price target represents a slight increase from the previous $80 target and is based on approximately 18 times RBC’s revised 2026 adjusted earnings per share estimate of $4.52.

In other recent news, CarMax reported impressive first-quarter results for fiscal year 2026, surpassing Wall Street expectations with an earnings per share (EPS) of $1.38, compared to the forecasted $1.19. The company achieved a revenue of $7.5 billion, slightly above the anticipated $7.54 billion, marking a 6% increase from the previous year. Truist Securities raised its price target on CarMax to $74.00 from $72.00, maintaining a Hold rating, while Mizuho (NYSE:MFG) kept a Neutral rating with an $80.00 price target. CarMax management expressed confidence in its digital capabilities, planning to allocate more advertising dollars toward its omnichannel strategy, which has contributed to its strong performance. The company noted that 80% of retail unit sales were supported by digital capabilities, highlighting the success of its digital transformation efforts. CarMax also maintained its guidance for the fiscal year, focusing on growing sales and market share. Despite these positive developments, analysts at Truist cautioned about potential challenges, including higher vehicle prices that could affect consumer affordability and market share sustainability.

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