Goldman Positive On CarMax, Raises PT

Goldman Sachs has published a research report on CarMax, Inc. KMX after a positive 3Q earnings report. In the report, Goldman Sachs writes "Used vehicle prices tracked +2.3% qoq during KMX's F3Q (Manheim 122.0 vs. F2Q average of 119.3). After October's strong seasonally-adjusted used vehicle price reading, we eliminated our previous -$40/vehicle qoq gross profit headwind related to pricing. We now layer on a +$50 qoq pricing-related tailwind and adjust used retail and used whole ASPs to reflect a +2.3% qoq increase vs. 2QFY11. Based on these changes, our 3QFY11 EPS rises to a Street-high $0.38 from $0.36 previously. FY11 EPS rises to $1.68 from $1.66, FY12 to $1.80 from $1.76, and FY13 to $2.00 from $1.95 on flow-through of the same. Our 12-month price target increases to $34 from $32 on our higher estimates and mark-to-market of the relative P/E portion of our price target analysis. We maintain our Neutral rating on valuation." CarMax Inc. closed yesterday at $34.53.