CarMax enters the back half of the week having broken above its previous resistance, with a same-day JP Morgan upgrade shifting the analyst narrative just as short sellers accelerate their retreat.
The catalyst is hard to miss. JP Morgan's Rajat Gupta upgraded KMX to Neutral from Underweight this morning, lifting his target from $38 to $60 — a 58% target revision that essentially admits the prior bearish thesis has broken down. That follows Barclays doing the same thing eight days ago, moving to Equal-Weight from Underweight with a new $61 target, up from $37. Two bellwether bears capitulating within a fortnight is a meaningful shift in analyst posture. The broader consensus remains at Hold — 14 analysts there, two at Underperform — and the mean price target of $54.85 now sits fractionally below the current price of $58.88, which means the Street is still catching up to where the stock trades rather than pulling it higher.
Short positioning tells a story of accelerating exit. Short interest has dropped 20% over the past month, falling from roughly 15.4 million shares to 12.3 million. That's 8.4% of the free float — still meaningful — but the direction is unmistakeable: shorts have been covering steadily since late June and the pace picked up sharply around July 10, when the share count fell from ~14.6 million to ~12.4 million in a single session. Borrowing costs have collapsed alongside that covering, falling 45% over the month to just 0.25% — essentially free to borrow. Availability is extraordinarily loose at 2,514%, meaning roughly 25 shares remain available to lend for every one currently borrowed. There is no squeeze pressure here; shorts exiting are doing so on their own schedule, not under force.
Options positioning has shifted decidedly bullish. The put/call ratio has dropped to 0.52, well below its 20-day average of 0.64 and near the 52-week low of 0.40 — almost 1.5 standard deviations below the mean. The shift is abrupt: through most of June and early July, the PCR ran in a consistent 0.71–0.73 band. It broke lower around July 20 and has stayed there. Call buyers have taken over, consistent with the upgrade momentum and the stock's 11.6% rise over the past month.
The ownership picture adds one genuinely interesting data point. In the week after the June earnings print — when the stock closed down 3% on the day — the CEO Keith Barr bought 9,400 shares at $53.00, a ~$498,000 purchase. Two independent directors added shares the same week at similar prices. That cluster of insider buying at $52–$53 came roughly $6 below where the stock trades today, and preceded the JP Morgan and Barclays upgrades by a matter of weeks. Net insider buying over 90 days amounts to 33,250 shares, worth roughly $1.67 million. Starboard Value also appears in the top institutional holders at 4.37% of shares outstanding — an activist presence worth monitoring as the strategic narrative develops.
On valuation, the trailing P/E has expanded to 20.4x, up roughly 1.8 turns over the past month as the stock has rerated faster than earnings estimates have moved. The EV/EBITDA of 27.1x is broadly flat over the same period. With the next earnings event scheduled for September 29, the question heading into that print is whether the operational improvements — cost cuts, omnichannel investment, new CEO momentum — translate into numbers that justify a stock now trading through most analyst targets, with its most vocal bears having just walked back their short theses in the same week.
See the live data behind this article on ORTEX.
Open KMX on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
