CarMax Faces Class Action for Misleading Investors, Stock Plummets 44%
Written by Emily J. Thompson, Senior Investment Analyst
Source: Globenewswire
Updated: 1 hour ago0mins
- Deadline Approaching: Hagens Berman law firm reminds investors that the lead plaintiff deadline for the CarMax (KMX) securities class action lawsuit is January 2, 2026, urging prompt action to protect their rights.
- Stock Price Collapse: CarMax's stock plummeted 20% following disappointing Q2 results in September 2025 and further declined after the CEO's termination in November, totaling a 44% drop, indicating a severe loss of market confidence in the company's fundamentals.
- Concealment of Core Issues: The lawsuit alleges that CarMax failed to disclose that its sales growth was artificially inflated by customers buying early to avoid tariffs, alongside an unexpected $142 million increase in loan loss provisions, highlighting deep operational issues within the company.
- Management Confidence Eroded: Despite executives previously assuring investors of earnings growth for years, the sudden CEO termination and drastic cuts to forward guidance signal fundamental weaknesses in operations, potentially undermining investor confidence and future stock performance.
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Analyst Views on KMX
Wall Street analysts forecast KMX stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for KMX is 40.92 USD with a low forecast of 27.00 USD and a high forecast of 60.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
17 Analyst Rating
2 Buy
12 Hold
3 Sell
Hold
Current: 41.650
Low
27.00
Averages
40.92
High
60.00
Current: 41.650
Low
27.00
Averages
40.92
High
60.00
Evercore ISI
In Line
maintain
$35 -> $37
2025-12-09
New
Reason
Evercore ISI
Price Target
$35 -> $37
2025-12-09
New
maintain
In Line
Reason
Evercore ISI raised the firm's price target on CarMax to $37 from $35 and keeps an In Line rating on the shares as part of adjusting estimates and targets among the firm's retail broadlines and hardlines coverage.
Morgan Stanley
Andrew Percoco
Equal Weight
initiated
$35
2025-12-08
New
Reason
Morgan Stanley
Andrew Percoco
Price Target
$35
2025-12-08
New
initiated
Equal Weight
Reason
Morgan Stanley analyst Andrew Percoco assumed coverage of CarMax with an Equal Weight rating and $35 price target. The firm adjusted ratings in the autos and shared mobility group as part of its 2026 outlook following a change in analysts. Morgan Stanley is "leaning more cautious" into next year, saying the electric vehicle "winter" will sustain through 2026. This is counterbalanced by a "moderately more positive" outlook on internal combustion engines and hybrids, the analyst tells investors.
Barclays
Underweight
initiated
$28
2025-11-11
Reason
Barclays
Price Target
$28
2025-11-11
initiated
Underweight
Reason
Barclays initiated coverage of CarMax with an Underweight rating and $28 price target. The firm rolled out coverage on the auto retail sector with a neutral view. Sector fundamentals are mixed, but the dealers offer "resiliency and strong shareholder returns," the analyst tells investors in a research note. Barclays is constructive on the growth outlook for the digital auction marketplaces as it sees the companies gaining shared from physical auctions. The firm cites uncertainty over CarMax's strategy for the Underweight rating.
Morgan Stanley
Daniela Haigian
Overweight -> Equal Weight
downgrade
$35
2025-11-10
Reason
Morgan Stanley
Daniela Haigian
Price Target
$35
2025-11-10
downgrade
Overweight -> Equal Weight
Reason
Morgan Stanley analyst Daniela Haigian downgraded CarMax to Equal Weight from Overweight with a $35 price target.
See All Ratings
About KMX
CarMax, Inc. is a retailer of used autos. The Company operates through two segments: CarMax Sales Operations and CarMax Auto Finance (CAF). The CarMax Sales Operations segment consists of all aspects of its auto merchandising and service operations. The CarMax Sales Operations segment sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers. The CAF segment consists solely of its own finance operation that provides financing for customers buying retail vehicles from the Company. The CAF segment also services all auto loans, it originates and is responsible for providing billing statements, collecting payments, maintaining contact with delinquent customers, and arranging for the repossession of vehicles securing defaulted loans. It provides customers with a range of other related products and services, including extended protection plan (EPP) products and vehicle repair services.
About the author
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Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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What are the key allegations against CarMax in the class action lawsuits?
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