Investing.com -- Evercore ISI upgraded CarMax (NYSE:KMX) to "Outperform" from "In Line" and added Carvana (NYSE:CVNA) to its Tactical Outperform list, driven by improving used car market trends and strong web traffic data.
The brokerage sees Carvana's stock rising to the $280-$290 range ahead of its fourth-quarter earnings on Feb. 19, forecasting a solid beat and raised guidance for used car sales and EBITDA. It expects Carvana to guide for 25-30% retail unit growth in 2025, above Street estimates of 21.7%.
For CarMax, Evercore expects the company to benefit from a widening used-to-new car price gap and improving market share. It raised its base case price target to $110, citing double-digit EBITDA growth and buybacks driving shareholder returns over the next two to three years.
Though analyst at Evercore added that “tariffs do pose a wildcard for Carvana and the industry.”
“Although we believe that used cars would likely prove relatively insulated from tariffs given all the cars sold at CarMax and Carvana are sourced domestically, and given that New car pricing could increase, potentially incentivizing consumers to used vehicles.”
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