CarMax (KMX) fiscal Q2 results showed another solid quarter with comparable used-vehicle sales momentum and the resumption of share buybacks boosting confidence in the company's trajectory, RBC Capital Markets said in a note emailed Wednesday.

CarMax reported Q2 operating revenue up 20% to $7.88 billion, ahead of the Street's expectation for $7.09 billion, while quarterly earnings jumped to $1.16 per share from $0.64 a year earlier.

RBC said it was "encouraged" by the company's progress and is now looking forward to its strategic update on Nov. 3.

The investment firm raised CarMax's fiscal Q3 retail comp unit estimate to 15% growth from 5% growth previously, and the net sales estimate to 15% growth from a 3% increase previously. RBC also now expects Q3 adjusted earnings per share of $0.58 up from $0.34 previously.

For fiscal 2027 and fiscal 2028, RBC now expects the company to post adjusted EPS of $3.32 and $3.76, up from $2.62 and $2.98 previously.

The investment firm added it will be "looking for data points to increase our conviction in FY'28 delivery to get more constructive on the name."

CarMax benefits from established omni-channel capabilities, attractive older vehicle offers and strong cash flow, RBC said.

RBC has a sector perform rating on CarMax and lifted the company's price target to $56 from $45.

Price: 56.61, Change: -2.62, Percent Change: -4.42