Needham ‘less convinced’ in CarMax leverage given market dynamics

Needham keeps a Hold rating on CarMax after its Q2 earnings miss. The analyst states that while the firm remains bullish on a used auto unit recovery and encouraged by higher levels of growth showing up in industry data, it is also becoming less convinced of Carmax’s leverage to a unit recovery given the end-market dynamics. Needham adds that CarMax appears to over-index to less seasoned and higher priced used vehicles, while current demand is over-indexing to used vehicles at the lower end of the price spectrum given consumer uncertainty and higher interest rates.