KMX Heads Into a Second Print With Shorts Rebuilding and Analysts Still Sceptical

CarMax reports again today — a rare same-quarter re-test of investor conviction — with short sellers cautiously adding back positions they covered into last week's earnings rally, while a wall of analyst price targets sits well below the current share price.

Short interest has crept back up to 10.5% of the free float, roughly 15.4 million shares, after the dramatic covering that preceded the June 17 print. The week-on-week change is a modest 1.8%, not an aggressive rebuild — but the direction has reversed. Notably, the borrow market imposes zero friction on that rebuild: availability runs at 1,807%, meaning there are roughly 18 shares available to borrow for every one currently lent out, and the cost to borrow is a negligible 0.49%. Any short wanting to press the stock harder faces no structural barrier. Options positioning is actually leaning slightly bullish relative to recent norms — the put/call ratio of 0.75 is marginally below its 20-day average of 0.78, down from levels closer to 0.82 in late May, suggesting options traders have not loaded up on downside protection despite the shorts drifting back in. The stock itself has given back 2.3% on the day to $52.40, though it remains up 30% over the past month.

The analyst debate is stark, and it has sharpened materially in the past week. Targets were raised almost universally in the days surrounding the June 17 print — Barclays lifted to $37, JP Morgan to $38, BofA to $45, Evercore to $58 — but the consensus price target of $50.15 now sits roughly 4% below where the stock trades. The mean target implies the Street collectively believes the post-earnings re-rating has overshot. Barclays and JP Morgan, both maintaining Underweight ratings, see closer to 27-28% downside from current levels. The bull case centres on Starboard Value's activist presence, structural advantages as the largest US used-vehicle retailer, and an improving earnings estimate trajectory — 30-day EPS momentum ranks in the 97th percentile. Bears point to affordability headwinds, elevated used-vehicle prices, rising competition, and specific pressure on CarMax Auto Finance, where lending market conditions remain difficult.

Ownership adds an interesting layer. Starboard Value holds 4.4% of shares outstanding as of March 31, making the activist among the top five holders and the clearest catalyst for any structural P&L unlock story the bulls are pricing in. The prior earnings reaction on April 14 — a single-day drop of 17.5% followed by a further 3% fall over five days — is a reminder of how severely the market can reprice when CarMax disappoints. The June 17 print reversed that: the stock gained nearly 3% on the day. That reversal is what has left shorts offside and analysts scrambling to lift targets while maintaining cautious ratings.

Today's print tests whether the June recovery was a genuine inflection or a relief rally that has now exhausted itself — and specifically whether CarMax can demonstrate progress on unit economics and CAF margins at a stock price that already embeds a more optimistic outcome than most of the covering analysts are willing to endorse.