CarMax rated Buy despite earnings dip, with $59 price target and 24% upside potential

CarMax's stock dropped nearly 9% after earnings showed weak gross profit per unit, despite beating revenue and earnings estimates. Passage Research rates CarMax as a Buy, arguing that Street estimates are too pessimistic given easier future comparisons. The company’s new strategy focuses on competitive pricing, digital experience, profitability, and cost efficiency to stabilize gross profit per unit. Passage Research projects $3.27 EPS and $27.8 billion revenue by FY27, supporting a $59 price target and 24% upside. Risks include slow retail demand, increased competition, and the need for growth beyond cost-cutting.