12:39 PM EST, 12/17/2024 (MT Newswires) -- CarMax ( KMX ) is projected to have a largely in-line fiscal third quarter as new "digital progression tools" help support used car sales, Wedbush Securities said in a note.

The car retailer should be able to deliver used car comparable sales growth around the brokerage's 2.5% and the consensus' 3% estimates. CarMax ( KMX ) is due to report results on Thursday.

The performance would reflect "strong performance to end the quarter and support from the newly completed rollout of digital progression tools for customers to complete transactions at stores that they started online and vice versa," analysts Seth Basham and Matthew McCartney said.

If CarMax ( KMX ) performs as expected, the company will have reported two quarters of solid comparable sales in a row amid likely market share gains, according to Wedbush. Data from Cox Auto indicated that the retail used car industry's sales were down 1% year over year in the first two months of the third quarter, Basham and McCartney said.

Wedbush reiterated an outperform rating and a $95 price target on the stock. The brokerage lifted its third-quarter earnings per share forecast to $0.57, remaining below the Street's $0.60 view. It is now modeling revenue of $6.09 billion, up from its previous $6.05 billion expectation, which is the consensus in a FactSet survey.

CarMax Auto Finance could see "modest downside risk" to consensus based on intra-quarter data, Wedbush said. Shares of CarMax ( KMX ) declined 2.7% in midday trade.

Within wholesale, prices falling less than historical seasonality may drive modest upside to the gross profit per unit consensus forecast of $970, the analysts wrote. Selling, general and administrative costs are expected to be in line.

"As importantly, we believe (CarMax ( KMX )) can hold retail gross profit per unit in this more benign pricing environment, driving a second strong quarter of gross profit comps that are solidly outperforming publicly traded franchised dealers," Basham and McCartney said.

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