Top Wall Street Forecasters Revamp CarMax Expectations Ahead Of Q1 Earnings

CarMax is set to release Q1 earnings with analysts anticipating $1.17 EPS, up from $0.97 year-over-year, and revenue of $7.53 billion, a rise from $7.11 billion. Recent analyst ratings present a mixed outlook: Wedbush reiterated an Outperform rating with a $90 price target, while RBC Capital maintained Outperform but lowered its target to $80, and JP Morgan maintained an Underweight rating, reducing the price target to $65 following weaker-than-expected Q4 earnings reported in April.

Analysis

CarMax, Inc. (KMX) is scheduled to release its first-quarter financial results, with analysts forecasting earnings of $1.17 per share, an increase from $0.97 per share in the prior-year period, and revenue of $7.53 billion, up from $7.11 billion. This anticipated growth comes after the company reported weaker-than-expected earnings for its fourth quarter on April 10, which may be influencing current investor sentiment, as evidenced by CarMax shares declining 2.2% to close at $64.43 on a recent Tuesday. Analyst ratings present a mixed picture: Wedbush (82% accuracy) reiterated an Outperform rating with a $90 price target on May 19, 2025. In contrast, JP Morgan (77% accuracy) maintained an Underweight rating and reduced its price target to $65 on March 27, 2025. RBC Capital (62% accuracy) also maintained an Outperform rating but cut its price target from $103 to $80 on April 11, 2025. Other ratings include a Hold from Truist Securities (71% accuracy) with an $88 price target (raised from $72 on Dec. 20, 2024) and an Outperform from Oppenheimer (67% accuracy) with a $105 price target (issued Oct. 4, 2024). This divergence among analysts, including those with high accuracy rates, underscores the uncertainty surrounding the company's near-term performance, aligning with the provided mixed overall sentiment signal and a slightly negative ticker-specific sentiment for KMX.

Key Decisions for Investors

• Investors should closely scrutinize the upcoming Q1 earnings release, particularly comparing actual results against the projected $1.17 EPS and $7.53 billion revenue, given the context of the prior quarter's earnings miss.
• The significant divergence in analyst ratings and price targets, ranging from JP Morgan's $65 Underweight to Oppenheimer's $105 Outperform, coupled with recent price target reductions by some firms, warrants a cautious approach and thorough re-evaluation of KMX's risk-reward profile post-earnings.
• Considering the recent share price decline and the mixed analyst outlook, it may be prudent to await the Q1 financial disclosures and management's subsequent commentary before committing new capital or making substantial changes to existing KMX positions.