On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on CarMax (NYSE:NYSE:KMX) by increasing the price target to $80 from the previous $72, while keeping a Neutral stance on the stock.
"CarMax (KMX) delivered very solid fiscal Q3 results with outperformance across virtually all key metrics. Used unit comps again trended above +4%, unlocking earnings upside and harvesting more of the benefits associated with years of investment spend," the firm said.
The company's higher earnings are partly attributed to consumers showing a slightly greater acceptance of the current inflationary but stable pricing environment, even though it remains a general challenge. Additionally, CarMax is exploring further efficiency opportunities within its operations, supported by the introduction of the AI tool "Rhodes" in the fourth quarter.
According to discussions with CEO Bill Nash and SVP of CarMax Auto Finance Jon Daniels, CarMax Auto Finance's (CAF) quarterly profits are estimated at around $160 million, correlating with a +4-5% comp level. There are ongoing efforts to enhance the capture of financing economics, which are expected to show results in the coming years.
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