CarMax (KMX) auto-finance unit reported mixed January trends with delinquency rates improving from December, while net loss rates rose, Wedbush Securities said Thursday in a report.

"Importantly, the decline in delinquency rate was observed across the portfolio," Wedbush said. Results are "directionally trending in line" with management commentary, the report said.

Delinquencies are likely to rise through the remainder of the fiscal year before easing during the upcoming tax-refund season, Wedbush said.

In the near term, CarMax plans to narrow the price gap with the broader market, improve the customer experience, expand digital monetization, reduce costs, and strengthen profitable growth drivers, Wedbush said.

"We believe investors have become increasingly concerned around the company's credit exposure, and more broadly, management's ability to sustain market leadership," the report said.

Wedbush maintained its neutral rating on CarMax stock with $36 price target.

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