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Thursday, March 28, 2024

Why CarMax Is A 'Favorite' Stock At Oppenheimer

Courtesy of Benzinga.

Why CarMax Is A 'Favorite' Stock At Oppenheimer

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In a report published Friday, Oppenheimer analyst Brian Nagel maintained an Outperform rating on CarMax, Inc (NYSE: KMX) with a price target of $77.

CarMax’s 1Q (May) results were hit by unfavorable weather and lumpy trends. “Market concerns of an underlying unfavorable turn at KMX seem overblown. Weather-related sales weakness at the chain typically proves transitory,” analyst Brian Nagel mentioned.

The company’s 1Q EPS was up 13 percent to $0.86, from $0.76 in the year ago quarter. The used car unit comps in the period were up 4.9 percent, narrowly missing the upper end of street forecasts of 5-6 percent. CarMax’s shares have declined by a little over 7 percent since the announcement of the company’s 1Q performance.

In the report Oppenheimer noted that results of a proprietary study revealed that “44 of 253 May “Prime” selling days at KMX stores located in the South-Central US were impacted by 0.5″ or more rain YoY. Per our estimates, May showers in these markets likely lowered Q1 (May) used car unit comps by 60-120 bps.”

The used car unit comps for CarMax would ease in 2Q (August). “In Q2 (Aug.) 2014 used car unit comps at KMX rose just 0.2% vs. +3.4% in Q1’14 (May 2014). Current Street forecasts for a mid-single digit comp gain in Q2 (Aug.) imply a moderation of a few % pts. in two-year comp trends,” the report added.

CarMax’s growth prospects are expected to be driven by its expansion potential, a broad-based strengthening in consumer demand for autos as recessionary pressures ease and its dominant online presence.

Latest Ratings for KMX

Date Firm Action From To
Jun 2015 SunTrust Robinson Humphrey Initiates Coverage on Neutral
May 2015 Sterne Agee Initiates Coverage on Buy
Apr 2015 Stifel Nicolaus Maintains Buy

View More Analyst Ratings for KMX
View the Latest Analyst Ratings

Posted-In: Brian Nagel OppenheimerAnalyst Color Reiteration Analyst Ratings Best of Benzinga

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