jpmorgan is pumping the brakes on shares of carmax  analyst rajat gupta downgraded the used vehicle stock to underweight from neutral saying that the riskreward looks skewed to the downside as the potential for lower earnings revisions linger to be clear we believe kmx is likely to be a longterm share gainer in the used car market and see investments over the last 3 years ultimately bearing fruit gupta wrote in a note to clients wednesday however the path to realizing this potential continues to get pushed out making it difficult to discount the timing and magnitude of normalized margins he also said recovery hopes look premature at the moment shares fell 36 before the bell in 2022 the stock shed 53 but is up almost 18 since its disappointing quarterly results in december the runup in the stock despite lingering issues is another reason gupta is shifting sentiment on shares carmax benefitted from an increase in prices and demand for used cars but that boom seemingly came to a shuttering halt in recent months as consumers faced high inflation high interest rates recession fears and a shift in spending patterns according to gupta wall street is also failing to accurately account for downside risks to overall earnings carmaxs auto finance business in particular could face rising delinquencies in a downturn and an increase in chargeoffs we are more concerned about the industry recovery potential which we believe is unlikely to be vshaped given potential for increasingly competitive sourcing environment for 14 yr old cars  and negative equity risk  coupled with caf that is far from normalized and an offset to any recovery slow or fast in retail volumeprofits he wrote gupta maintained the wall street firms 60 price target on carmax which represents 11 downside from tuesdays close cnbcs michael bloom contributed reporting