Used-car retail giant CarMax Inc (NYSE: KMX) on Thursday reported disappointing second-quarter results.
Check CMS stock’s latest moves here.
Here are some key analyst takeaways:
- Oppenheimer analyst Brian Nagel downgraded the rating from Outperform to Perform, while eliminating the price target.
- Needham analyst Chris Pierce maintained a Buy rating, while slashing the price target from $92 to $60.
- Truist Securities analyst Scot Ciccarelli reiterated a Hold rating, while cutting the price target from $74 to $47.
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Oppenheimer: CarMax's earnings declined nearly 25% to 64 cents per share, coming in significantly short of Street expectations of $1.04 per share, Nagel said in the downgrade note. The earnings miss was due to softer used car unit comps, which declined by 6.3% versus expectations of 1.1% growth and an increase in incremental loan loss provisions, he added.
Used unit sales contracted 5.4%, following year-on-year growth of 9% in the first quarter, the analyst stated.
"In our view, a notable deceleration in used unit sales at KMX lately reflects primarily internal inventory mismanagement, aggravated by a more challenged demand backdrop, particularly among core, more creditworthy consumers," he further wrote.
Needham: CarMax's strong results in the first quarter suggested an improvement in end market demand and share gains, and the company grew its inventories, Pierce said. Due to elevated inventory levels, CarMax had to rely on price cuts in the second quarter, he added.
"KMX continues to struggle to find consistent footing, with a return to negative unit comps and continued elevated loan losses as twin headwinds to earnings power," the analyst wrote. Management indicated month-on-month improvements in demand during the second quarter, although comps have remained negative to date, the analyst stated.
Truist Securities: CarMax's second-quarter results missed expectations across the board, Ciccarelli said. Comps were negative in each of the months in the quarter and the two-year stack decelerated to a decline of 2% from 4% growth in the previous quarter, he added.
The weaker trends seem to have continued into the third quarter, the analyst stated. "We believe KMX continues to face share challenges and the path forward looks highly uncertain," he further wrote.
KMX Price Action: Shares of CarMax had declined by 0.48% to $45.41 at the time of publication on Friday.
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