CarMax's (KMX) sales softness can be attributed to macroeconomic concerns and CEO Bill Nash's abrupt departure, RBC Capital Markets said in a Monday research note.
The brokerage expects Q3 comp used unit sales to decline 10%, net sales to fall 9.5%, and adjusted EPS to decline 62% to $0.30, versus Wall Street's expectation for $0.37 and the company's guidance of $0.18 to $0.36 per share.
CarMax is expected to release Q3 earnings Thursday.
The company closed a second non-prime securitization transaction and expects to gain $25 million to $30 million in Q3 income, along with an additional $40 million to $45 million in CarMax Auto Finance income related to servicing fees, analysts wrote.
CarMax expects service margins to face pressure in the back half of the year on seasonal sales volumes, but still plans to deliver positive margins for the fiscal year.
The brokerage said it downgraded the stock to sector perform from outperform and lowered its price target 17% to $34 per share.
Price: 41.25, Change: +0.24, Percent Change: +0.59
