On Thursday, Needham maintained its Buy rating on Blue Bird Corp (NASDAQ:BLBD) and increased the price target for the shares to $52.00, up from the previous $44.00.
This adjustment follows Blue Bird's impressive performance in the second quarter of fiscal year 2024, where the company exceeded consensus estimates and raised its full-year guidance. Additionally, Blue Bird has updated its long-term adjusted EBITDA margin guidance.
The company's recent success can be attributed to a cyclical recovery in school bus purchases, along with an uptick in demand for subsidized electric vehicle (EV) school buses.
These factors have contributed to higher average selling prices (ASPs) and have expanded Blue Bird's margin opportunity. School districts are leveraging government funding, which is further bolstering Blue Bird's financial position.
Needham's revised price target of $52 is based on 10 times the firm's updated fiscal year 2025 adjusted EBITDA estimate. This valuation represents a discount to the 14% adjusted EBITDA growth projected in Needham's model. The firm's estimates for 2027 are conservative, staying below the low end of Blue Bird's new long-term guidance.
The upgrade in Blue Bird's price target reflects a positive outlook on the company's future performance, driven by its ability to capitalize on current market opportunities. The company's raised guidance and improved margin outlook underscore its potential for continued growth in the evolving school transportation sector.
InvestingPro Insights
As Blue Bird Corp (NASDAQ:BLBD) garners attention with its raised full-year guidance and Needham's bullish stance, InvestingPro data provides a deeper dive into the company's financial health and market performance. With a market capitalization of $1.21 billion and a noteworthy revenue growth of 33.91% in the last twelve months as of Q1 2024, Blue Bird is showing significant financial momentum.
The company's Price/Earnings (P/E) ratio stands at 15.28, with an adjusted P/E for the last twelve months at 19.34, reflecting investor confidence in its earnings potential. The Price to Book (P/B) ratio of 15.99 suggests a premium market valuation, indicative of the high expectations investors have for Blue Bird's asset value and growth prospects.
InvestingPro Tips highlight Blue Bird's expected net income growth this year and a strong return over the last three months, with a 22.88% price total return. These insights, along with a significant return over the last week of 9.45%, underscore the company's recent market performance. For those interested in further analysis, there are additional InvestingPro Tips available, which can be accessed for a deeper understanding of Blue Bird's market dynamics. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock the full spectrum of insights that InvestingPro has to offer.
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