Bank of America Upgrades CarMax After 13% Rise in Unit Comparables

Bank of America upgraded CarMax to buy from underperform on Oct. 15, pointing to the retailer’s sales growth and pricing position, which the bank believes may benefit from the Federal Trade Commission’s (FTC) price-transparency push. CarMax’s unit comparables rose 13% year over year in its fiscal second quarter. Public peers’ unit comparables fell an average of 4% over the same period. The bank also raised its price target on CarMax shares to $65 from $50. Its view centers in part on the FTC’s price-transparency push, which began in May, and the possibility that wider compliance could help CarMax gain market share. Bank of America said some rival dealers have advertised prices that omitted fees, while CarMax generally prices vehicles with few or no added fees.

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