CarMax heads into its September earnings cycle with a curious split: analysts have turned more constructive, yet short sellers have quietly rebuilt their positions over the past month.
Short interest is the week's clearest tension. Bears have added meaningfully — the short position climbed roughly 10% over the past week and is up nearly 8% over the past month, now representing 9.1% of the free float. That is a genuine level of conviction. The borrow market, however, offers no sign of stress: availability is extraordinarily loose at 3,793%, meaning shares to borrow remain plentiful relative to what is already out. Cost to borrow has risen sharply — up more than 70% over the week to 0.51% — but in absolute terms it remains cheap, the kind of level that imposes no meaningful friction on new shorts. Together, the picture is of a growing short book built cheaply and easily, not a crowded squeeze candidate.
Options positioning reinforces the relaxed tone. The put/call ratio at 0.54 is marginally below its 20-day average of 0.55 — well within normal range and carrying a slightly negative z-score. There is no sign that options traders are paying up for downside protection. For context, the PCR touched 0.88 in mid-July before collapsing; the current level is near the low end of the past year's range at 0.40.
The Street has been moving in the same direction as the stock, not against it. JP Morgan upgraded KMX to Neutral from Underweight on July 29, lifting its target from $38 to $60. Barclays made a comparable move on July 21, upgrading to Equal-Weight from Underweight and raising its target from $37 to $61. Both represent dramatic reversals from prior bearish stances. The consensus, however, remains firmly at "hold" with 14 hold ratings and 2 underperforms, and the mean price target of around $55 sits modestly below the current price of $57.40 — implying the Street collectively sees the stock as roughly fairly valued or slightly stretched after a 51% year-to-date run. The analyst recommendation divergence factor scores in the 98th percentile, which reflects how far the recent upgrades have shifted sentiment relative to the longer-term consensus average. Bulls point to CEO Barr's operational overhaul and improving EPS estimates; bears lean on macro sensitivity, rising interest rates on consumer credit, and competitive pressure from online dealers.
Institutional ownership adds an interesting subplot. Starboard Value holds roughly 4.4% of shares, with the full position reported as a new entry as of March 31 — a notable activist presence that likely underpins some of the bullish narrative around management change. American Century added over 1.8 million shares in the most recent period, a sizeable build. On the insider side, the CEO and multiple independent directors bought shares in late June near $52-53 — not enormous in dollar terms, but a cluster of buying from a broad group of insiders around the same price level shortly after the last earnings print is worth noting. The net insider position over 90 days is a modest positive $1.7 million.
With Q2 results scheduled for September 29, the next few weeks will test whether the upgraded analyst targets and the insider buying cluster around $52 provide a floor — or whether the quietly rebuilding short book reflects something the upgrades are missing.
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