CarMax shares came under fresh pressure after CFRA and Oppenheimer cut their ratings on the used-car retailer, after disappointing quarterly earnings, weakening sales trends, and execution missteps.
Shares were down 2% in premarket trading on Friday.
Garrett Nelson, analyst at CFRA lowered CarMax to Buy from Strong Buy and slashed his price target to $60 from $100.
“While we remain positive on the story over the intermediate term given various tailwinds that should favor used vehicle sales, poor management execution, an inconsistent earnings track record, and margin-related concerns cause us to take a less bullish stance,” Nelson said.
CFRA now sees company earnings less that what it expected. It cut adjusted earnings forecasts to $3.35 for fiscal 2026 from $4.25 and to $4 for fiscal 2027 from $4.95.
Though analyst added that the recent sell-off was an “overreaction” and said cost cuts and lower rates should aid results.
CFRA also expects share repurchases to rise, noting CarMax bought back $384 million in stock in the first half of fiscal 2026 versus $428 million in all of fiscal 2025.
Oppenheimer downgraded CarMax to Perform from Outperform and removed its price target, which had been $105.
The brokerage said second-quarter results for the three months ended August fell “well short” of expectations, with earnings per share dropping nearly 25% to $0.64, below Wall Street’s $1.04 forecast.
Used vehicle sales slipped 6.3% against an expected gain of 1.1%, while loan loss provisions rose to $142.2 million from $112.6 million a year earlier.
“We are increasingly concerned that the company must endure a potentially elongated strategic retrenchment,” Oppenheimer said, adding that it does not expect investors to bid shares higher without clear evidence of recovery.
There also remains competition from Carvana and traditional dealers.
Source :
https://www.investing.com/news/stock-market-news/analysts-turning-bearish-on-carmax-after-weak-quarter-4257721
