Post #25 by rnam on the Falling Knives board

Investment Strategies / Falling Knives

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The range of price targets for KMX is amazing. I have rarely seen such disparity.

Morningstar  $141 (previous target $155)
Baird        $65 ($82)
Evercore     $60 ($64)
Stephens     $53 ($64)
CFRA         $50 ($75)
BofA         $49 ($100)

Most Wall St. research outfits have Price Targets (PT) and not Intrinsic Value(IV). Usually, PT is the price they expect the stock to reach in the next 12 months, though the period may be even shorter.

Morningstar seems to be the exception, where they are estimating IV, and looking at FY 2026 revenue. Other analysts rarely look beyond current or next FY.

We are lowering our fair value estimate to $141 per share from $155. The change is mostly from
lowering our fiscal 2023 and 2024 profit and revenue projections, which have proved too optimistic,
given the affordability problems consumers have today with buying used vehicles. We also increased
our tax rate assumption to 24.5% from 23%, based on where the firm's current tax is trending, and
slightly lowered our long-term profit growth assumption. Total revenue across fiscal 2023-27 is now
7.4% lower than our prior valuation at $162.7 billion.
In April 2022, management announced a fiscal 2026 revenue target of $33 billion-$45 billion. We model
fiscal 2026 sales of $33.8 billion, down from about $36.6 billion previously. Revenue should face
headwinds into fiscal 2024 as used-vehicle prices, though falling from recent levels...

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