CarMax: ‘Comps Don‘t Lie‘: Move to Neutral as Elasticity Surprises to the Upside; Industry Backdrop and Calendar Support Revisions and Multiple For Now; Establish $60 Dec 2027 PT

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CarMax: ‘Comps Don‘t Lie‘: Move to Neutral as Elasticity Surprises to the Upside; Industry Backdrop and Calendar Support Revisions and Multiple For Now; Establish $60 Dec 2027 PT

.2%

Adj. EPS - 28E ($) 3.00 3.40 13.1%

event, where we could expect a deep-dive around finco monetization strategy,

potentially being more aggressive on penetration and monetization avenue Quarterly Forecasts (FYE Feb)

(CVNA-style), providing further support to revisions. The combination of these Adj. EPS ($)

drivers suggests revisions AND multiples are likely to get support for now, and as 2026A 2027E 2028E

such we move to Neutral. At current levels, with the stock trading at ~17x FY2 P/E Q1 1.38 1.31A 1.16

Q2 0.64 0.80 0.81

(in line with long-term averages), much of the near-term growth seems priced in Q3 0.43 0.49 0.81

as per our updated estimates, keeping us from moving to a more constructive Q4 0.15 0.39 0.61

stance. We update estimates to above consensus levels with F2Q/FY27/FY28 of FY 2.63 3.00 3.40

$0.80/$3.00/$3.40 vs $0.65/$2.65/$3.00 prior and establish a Dec 2027 PT of $60

Style Exposure

(vs. prior Dec 2026 PT of $38), applying a 15x P/E target multiple to our FY29 EPS

of $4.00.

What is keeping us from moving to OW? We believe investors need clearer

evidence of execution on a few key fronts: 1) can KMX show business resiliency

and share capture in an above normal depreciation and choppy used car backdrop;

2) If recent comp improvement is allowing the company to kickstart the growth

flywheel via tangible progress on reconditioning/logistics cost efficiencies and

SG&A leverage to support unit economics, such that FY27 is truly a one-time hit

to retail GPU; and 3) reset in customer experience and organizational culture

(including store associate morale and incentive structure).