CarMax's (KMX) used vehicle sales could increase in the coming quarters due to "sharp" tariffs on imported new cars, Wedbush analysts said in a Friday note.

The used vehicle retailer could see an increase of over 500 basis points in comparable sales relative to fiscal Q4 trends after consumers trade down from new to used cars, the analysts said. Wedbush also said that the company's comparable sales "historically accelerate when the gap between new and used car prices widens."

Wedbush also sees the 17% decline in the company's stock price on Thursday after it reported its fiscal Q4 earnings as "an overreaction," and views the pullback as a buying opportunity.

Wedbush also said that the company's fiscal Q1 has "started strongly" in terms of comparable sales and the company is poised to benefit from investments in its omnichannel business model and from market dynamics.

Wedbush reduced its target price to $90 from $100 while retaining an outperform rating on the stock.

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