Analysts Hailed CarMax's Q1 Performance While Highlighting Concerns

Analysts lauded CarMax Inc's KMX Q1 beat while also pointing out the macro concerns.
RBC Capital analyst Steven Shemesh maintained CarMax with an Outperform and raised the price target from $104 to $108 in a note titled, "F1Q'23 Follow-Up – Navigating Volatility Well."
KMX's results were broadly in line with expectations, Shemesh noted.
He expected the inflationary pressures and the eventual replenishment of new car inventory to weigh on the used vehicle market.
He believes KMX's recent investments behind digital capabilities position it well to continue gaining share.
Chris Pierce from Needham reiterated a Hold rating on CarMax post KMX's fiscal 1Q results in a note titled "Possible Switch To Premium From Unleaded, Reiterate Neutral."
He was impressed with the execution and a notable potential positive philosophical shift in KMX's critical KPI that could have staying power even as the used vehicle end market shows sustained weakness.
Pierce's Neutral rating is predicated on end-market weakness, and lower SG&A leverage as KMX continued its pivot to omnichannel. Still, KMX delivered higher gross profits vs. his expectations, mitigating some of his concerns on SG&A leverage.
Also, CAF income provided an offset to some of the marketplace weaknesses.
Price Action: KMX shares traded higher by 0.26% at $98.62 on the last check Monday.
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