CarMax (KMX) Stock Forecast & Price Target

CarMax is attractive because its used-car leadership is still underpenetrated, with roughly 4% share of a highly fragmented market and only about 3.6% of zero-to-10-year-old vehicles in calendar 2025, leaving substantial runway for share gains. Recent operating trends strengthen the case: F2Q'27 retail comp units rose 13% year over year, retail GPU held at $2,105 despite a planned decline, and about 510 bps of SG&A leverage supports margin resilience. The resumption of share repurchases, $1.31 billion remaining on authorization, and management’s expected $200 million in exit-rate savings by the end of FY'27 further improve earnings power and financial flexibility.

CarMax is facing a difficult fundamental setup because affordability remains stretched, with used vehicle prices still about 40% above pre-pandemic levels and monthly payments roughly 50% higher, which weighs on unit growth and keeps demand fragile. Its competitive position also looks pressured, as it sits between Carvana’s stronger e-commerce mindshare and traditional dealers with deeper inventory and make/model expertise, while an omni-channel rollout that fails to gain traction and tighter auto lending could further slow sales. Even with 780,684 used vehicles retailed in fiscal 2026 and only about 3.6% share of the zero-to-10-year-old market in calendar 2025, the outlook is cautious because tougher FY’27 and FY’28 comparisons, higher funding rates, and credit deterioration could strain CarMax Auto Finance profitability.