Baird Lowers Earnings Forecast For CarMax, Seeing Slower Growth

Baird's Craig Kennison reiterated CarMax, Inc KMX's Neutral rating while lowering the price target from $60 to $58. The report came after CarMax reported Q1 EPS at $0.90 vs. $0.92 estimates with sales of $4.13 billion vs. estimates of $4.19 billion.

"Big picture, we consider F2017 a transition year and remain selective on valuation as investors sort through concerns about slower growth, credit availability, and competitive threats," said Kennison. He was disappointed how the subprime comparable tumbled 19 percent this quarter "driven by a decline in applications across the lower end of the credit spectrum." Other negatives included a higher provision for loan losses and deteriorating recovery values.

Although CarMax didn't impress Kennison with its earnings report, the analyst saw promise in recent refinements including a new Carmax.com as of April and a new test system for credit approvals.

At time of writing, CarMax traded at $46.55, down 3.3 percent.