CarMax, a major player in the used-car retail sector, recently disclosed its financial performance for the third quarter of 2025, revealing figures that exceeded analyst predictions. The company reported earnings per share of 43 cents, with adjusted earnings reaching 51 cents per share after accounting for restructuring expenses. Quarterly sales totaled $5.794 billion, a 6.9% decrease from the previous year, yet still outperforming the Street's forecast of $5.678 billion.
In response to these results, various financial analysts have updated their price targets for CarMax. David Bellinger from Mizuho maintained a 'Neutral' stance but reduced his price target from $46 to $36. Similarly, Scott Devitt of Wedbush kept a 'Neutral' rating, lowering the target from $40 to $36. Stephens & Co.'s Jeff Lick also maintained an 'Equal-Weight' rating, decreasing the price target from $39 to $36. On a more conservative note, Rajat Gupta from JP Morgan upheld an 'Underweight' rating, cutting the target from $30 to $28. Conversely, Steven Shemesh of RBC Capital maintained a 'Sector Perform' rating while slightly increasing the price target from $34 to $37. These adjustments highlight the diverse perspectives within the analyst community regarding CarMax's future trajectory.
CarMax's interim President and CEO, David McCreight, emphasized the company's inherent strengths, including its extensive physical and digital infrastructure, strong brand presence, and acclaimed corporate culture. Despite these advantages, he acknowledged the need for strategic changes based on recent outcomes. McCreight and Tom are dedicated to steering CarMax toward future success as the Board seeks a permanent CEO to lead the company. The stock experienced a marginal dip of 1.6% to $38.71 on the day following the earnings announcement.
The current landscape for CarMax reflects a dynamic market where strategic leadership and adaptable business models are paramount. The company's resilience in surpassing some financial benchmarks, even amidst a sales decline, underscores its potential. The varied analyst revisions serve as a testament to the complex factors influencing market valuations, encouraging investors to consider both immediate performance and long-term strategic adjustments. Ultimately, CarMax's journey forward will depend on its capacity to innovate and adapt, ensuring sustained growth and stability in an evolving economic environment.