FMP
William Blair Reaffirms Outperform on CarMax, Sees Path to Doubling Business
Jun 20, 2025 4:44 PM - Davit Kirakosyan
Image credit: FMP
William Blair reiterated its Outperform rating on CarMax (NYSE:KMX), pointing to solid sales momentum and a strong setup for profitability acceleration in 2025 driven by better operating efficiency.
The firm sees significant upside potential as CarMax gains national market share in used vehicles aged 0 to 10 years. With its current share at 3.7%, analysts believe the company can move closer to the double-digit levels it has reached in its most established markets. As this expansion plays out, profits are expected to outpace sales growth thanks to improved SG&A leverage and a more lucrative finance division.
While bullish on the long-term trajectory, William Blair also flagged key risks, including the complexities of managing a high volume of depreciating inventory, dependence on asset-backed securitizations to support its financing arm, and macro sensitivity tied to big-ticket consumer purchases.
Still, the firm views CarMax as well-positioned to scale its business meaningfully in the years ahead.
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