Morgan Stanley analyst Adam Jonas raised the firm's price target on CarMax (KMX) to $180 from $116 and keeps an Overweight rating on the shares.
The stock closed Thursday up $1.58 to $93.49.
The market is getting CarMax wrong, Jonas, whose new target represents 90% upside, tells investors in a research note. Carvana (CVNA) has disrupted the used car dealer industry by offering a comprehensive end to end experience for consumers to transact in the buying and selling of cars online, says Jonas, who upgraded those shares this morning to Equal Weight. The analyst believes CarMax can leverage Carvana's formula in its own way by further tapping into its existing dealer store network and brand value to assist growth. He expects 6.8% retail unit growth from through 2031 for CarMax, driven by total market growth, market share gains, and new store openings.
The market is "meaningfully under-appreciating" CarMax as a beneficiary to the online buying secular tailwind, contends Jonas.
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