CarMax Stock Price Target Lowered on Credit Concerns By Investing.com

Truist Securities on Friday lowered its price target on shares of CarMax (NYSE:) from $75 to $72 but maintained a hold rating. This adjustment reflects considerations of a challenging credit environment and potential impact on sales.

The Truist Securities analyst noted that CarMax posted a 4.3% gain in second-quarter used vehicle comps, above the 3.0% expected. This trend appears to be continuing in the third quarter, with further positive results expected. However, recent credit market scrutiny has resulted in a significant increase in loan loss provisions, including an adjustment of $20-30 million. This led to significant distrust in the CarMax Auto Finance (CAF) segment.

The report further suggests that if loan defaults continue to rise, there is a risk of lending tightening, which could have a negative impact on sales. Despite the increase in sales, the analyst expressed concerns about ongoing challenges in the industry, such as affordability and credit issues, as well as competitive pressure from online platforms and other retailers.

The Hold rating on CarMax remains in place, with the revised price target of $72 taking into account the potential headwinds the company faces.

In other recent news, CarMax reported a 13% increase in August quarter earnings to $0.85 per share, while net sales fell slightly by 0.9% to $7.01 billion. The company also reported a 5.1% increase in retail sales. Analysts have expressed varying views on CarMax’s performance.

Needham raised the price target to $90, citing strong second-quarter results. Mizuho maintained a neutral stance with an unchanged price target of $72, citing the increasing credit pressure the company is facing. RBC Capital Markets raised its price target to $82, citing a 4.3% increase in comparable retail sales.

Evercore ISI raised its price target to $79 but expressed concerns that higher loan defaults could lead to tighter credit conditions. CFRA analyst Garrett Nelson maintained a Buy rating with an unchanged price target of $100. In other developments, CarMax is testing new credit scoring models and plans to centralize logistics operations.

Investing Pro Insights

As CarMax (NYSE:KMX) navigates a challenging credit environment and changing market conditions, valuable insights from InvestingPro provided investors with a clear picture of the company’s financial health and prospects. According to recent data, CarMax has a market capitalization of about $11.63 billion and is trading at a price-to-earnings (P/E) ratio of 30.54, which slightly increased to 29 by the second quarter of 2025 when taking into account the trailing twelve months .24 reduced. This rating comes against the backdrop of a 3.03% decline in sales over the last twelve months, indicating a potential revenue challenge as expected by analysts.

InvestingPro Tips highlights that CarMax is a prominent player in the specialty retail industry, but is suffering from weak gross profit margins, which currently stand at 11.96%. Nevertheless, the company’s liquid assets exceed its short-term obligations, providing some financial stability. Analysts have cut their profit forecasts for the coming period, reflecting concerns also raised by Truist Securities. CarMax does not pay a dividend to shareholders, which could influence investment decisions for income-seeking investors.

For those considering a more in-depth analysis, InvestingPro offers an additional wealth of tips for CarMax that provide a comprehensive understanding of the company’s financial position and future prospects. For more information visit

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