Thursday, September 14, 2006

XM And Sirius: How About A Cross Promotion Push With The Pre-Owned Sector!

CarMax: Raising Q2 ests on stronger than expected market trends
Thomas Weisel (39.92 -1.39) www.briefing.com, In Play

Thomas Weisel notes KMX is scheduled to report 2Q07 (August) results on September 20. Firm believes that sales trends in the used vehicle market are tracking better than expected, and, as a result, they are raising their 2Q EPS est to $0.44 from $0.40, which compares to consensus of $0.41 (range of $0.40 to $0.50). Specifically, they are increasing their 2Q used vehicle comparable-store sales est from down 1% to up 3%. Firm acknowledges, however, that their est represents the lowest comp on a three-year basis of 6.0% compared to 9.0%, 14.0%, 7.0%, 9.0%, and 13.0% for the previous five quarters and could still prove conservative. Although mgmt mentioned on last quarter's conf call that it expects to shift a few mln dollars of incremental expense from 1Q to 2Q/3Q, they est that this would only have a de minimis impact on EPS. Given the upside in 1Q coupled with firm's expectation for modest upside in 2Q, they believe that guidance could trend higher, but notes that it may already be reflected in co's shares.

9/14/2006 03:32:00 PM

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