CarMax Stock Upgraded Before Earnings

The shares are rising in response, and options traders are chiming in

Laura McCandless

Deputy Editor

Sep 25, 2023 at 11:05 AM

CarMax Inc (NYSE:KMX) is enjoying a boost today, after an upgrade from Wedbush to "outperform" from "neutral," with a price-target hike to $90 from $85. The firm cited improved growth, profitability, and market share potential, and analysts previously predicted that ongoing UAW strikes against the Detroit Three -- General Motors (GM), Ford (F), and Stellantis (STLA) -- would boost demand for pre-owned vehicles.

Evercore ISI threw in a modest bear note today as well, lowering its price target to $78 from $80. Now, eight of the 17 analysts in coverage carry a "buy" or better rating, while the 12-month consensus price target of $81.54 is a slim premium to current levels.

At last glance, KMX was up 2.2% at $78.35, earlier as high as $79.32. Bouncing off last session's three-month lows, the equity is up 28.7% since the start of 2023. Plus, support lingers below at the stock's 140-day moving average.

Over in the options pits, CarMax stock is seeing double the options volume typically seen at this point. The weekly 9/29 65-strike put is the most popular contract, with new positions opening there.

It's also worth noting that CarMax is gearing up for its latest earnings report, due out before the open on Thursday, Sept. 28. KMX finished higher just three of its last eight post-earnings sessions, averaging a 10.5% move, regardless of direction. This time around, the options pits are pricing in a next-day swing of 14%.

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