Morgan Stanley analyst Adam Jonas lowered the firm’s price target on CarMax to $75 from $90 and keeps an Overweight rating on the shares. The analyst notes CarMax posted same-store down 22.4%, a similar magnitude decline to the GFC. While his bear case of a 30% used market price drop looks more realistic, Jonas stick with the Overweight on CarMax valuation versus normalized earnings and as a hedge against franchise dealers where he sees greater negative revision risk. Despite the headwinds confronting the used car market, the analyst remains relatively constructive on CarMax as earnings revisions have taken 2023 forecasts to levels less than half that achieved pre-COVID.
Published first on TheFly
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