CarMax, Inc. (KMX) Turns to Pricing and Marketing Actions to Revitalize Sales

Carmax Inc. (NYSE:KMX) is one of the best used-car stocks to buy, according to hedge funds. Late last year, the company reiterated plans to boost ad spending as it seeks to repair its business. The company is racing against time to address a significant sales slump that has wiped out nearly half of its market value.

“We are optimistic that our immediate pricing and marketing actions will improve our sales performance, but pressure earnings in the near term,” interim Chief Executive Officer David McCreight said in an earnings call.

The company is also targeting $150 million in cost cuts, focusing on general and administrative expenses. The effort will include layoffs affecting nearly a third of the company’s workforce.

Following the remarks, Truist Securities raised its price target to $37 from $35 and reiterated its Hold rating. The price target hike is in response to third-quarter results that came in line with estimates. The cautious outlook comes amid concern that the company is under immense pressure of being caught in the middle of an online juggernaut and savvy traditional dealer groups.

CarMax, Inc. (NYSE:KMX) is the largest U.S. used vehicle retailer with 250+ locations and a “no-haggle” pricing model, specializing in certified used cars, financing, and direct consumer purchases’.

While we acknowledge the potential of KMX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 12 Best Consumer Goods Stocks Billionaires Are Quietly Buying and Goldman Sachs Penny Stocks: Top 12 Stock Picks.

Disclosure: None. This article is originally published at Insider Monkey.