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Investing.com - BofA Securities resumed coverage on CarMax Inc. (NYSE:KMX) with an Underperform rating and set a price target of $40.00. The firm cited continued comparable unit declines and market share loss as reasons for the rating. The stock currently trades at $40.83, remarkably close to BofA’s target, though InvestingPro analysis suggests the company is undervalued at current levels based on its Fair Value assessment.
Analyst Alexander Perry stated the price target is based on 14 times the firm’s fiscal 2028 earnings per share estimate. BofA Securities said it views CarMax’s long-term strategy positively, including price investments, marketing changes and improved site experience.
CarMax reported fiscal fourth quarter 2026 sales of $5.96 billion, declining 1% year-over-year but exceeding the Street estimate of $5.74 billion. Comparable store used units declined 1.9%, an improvement from the 9.0% decline in the prior quarter.
Gross profit per unit declined $207 versus last year, compared with a $71 decline in the previous quarter. The company said the decrease reflected intentional pricing actions to improve sales trends.
GAAP earnings per share of negative $0.85 fell below the Street estimate of $0.23. The results included $0.20 of restructuring charges and $0.99 of non-cash goodwill impairment.
In other recent news, CarMax Inc. reported several key developments that have caught the attention of investors and analysts. The company faced an impairment charge exceeding $140 million and increased loan loss provisions, affecting its financial outlook. Despite these challenges, CarMax’s fourth-quarter fiscal 2026 results surpassed expectations from both Barclays and other analysts, largely due to effective pricing actions and advertising strategies.
RBC Capital raised its price target for CarMax to $41, citing progress in top-line growth, although it remains cautious about the sustainability of this trend. Mizuho also adjusted its price target to $38, noting the company’s efforts in resetting retail pricing and cutting operating expenses. Conversely, Barclays lowered its target to $26, expressing concerns over margin pressures. Evercore ISI maintained an In Line rating with a $45 price target, highlighting a smaller-than-expected decline in retail used unit comparable sales.
Truist Securities upheld a Hold rating with a $37 price target, as CarMax appointed Keith Barr as the new CEO, who is focusing on lowering selling prices and gross profit per unit to boost sales volume.
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