CarMax Gains As Analyst Sees 18% Upside

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By Dhirendra Tripathi – CarMax (NYSE:) rose 1.6% in Friday’s trade after Oppenheimer raised its price target, seeing around 18% upside from the current price.

The stock is currently just 5% shot of its 52-week high of $136.49.

Oppenheimer analyst Brian Nagel maintained a buy rating on CarMax, setting a price target of $153. Nagel expects Carmax Inc to post earnings per share of $1.29 for the second quarter of 2021.

The current consensus among eight TipRanks analysts is for a strong buy of CarMax shares with an average price target of $142.5. The price targets range between $130 and $154.

February quarter earnings at the used car retailer, announced April 1, fell 2.3% from a year ago, to $209.9 million. This was even as revenue rose 4%, to $5.16 billion.

A major factor was a nearly 15% increase in selling, general, and administrative expenses to $556.1 million. As a percentage of net sales, they rose by 100 basis points to 10.8%.

The company also warned about the dangers that a Covid-19 health crisis poses for its business.

CarMax is buying the remaining stock of Edmunds, an online guide for automotive information. The enterprise value of Edmunds has been pegged at $404 million, including the $50 million CarMax paid for an initial stake in January last year.

Edmunds generated unaudited revenue of around $140 million in 2020. The transaction is expected to close in June.

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