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RBC cuts Skyline shares target amid cost concerns

EditorEmilio Ghigini
Published 05/23/2024, 06:48 PM
© Reuters.
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On Thursday, RBC Capital Markets adjusted its outlook on Skyline Corporation (NYSE: SKY) shares, reducing the price target to $68.00 from the previous $73.00 while maintaining a Sector Perform rating on the stock.

The firm cited increased general and administrative expenses as a result of the Regional acquisition and a decrease in sales estimates as key factors for the adjustment. The market's underperformance this quarter was significant, but the first-quarter guidance suggests some potential for recovery.

The analyst from RBC Capital Markets pointed out that product liability costs are expected to continue to impact Skyline Corporation until there is more clarity on the full scope and possible recovery of these expenses.

Additionally, the demand for community housing poses a risk without a clear and sustained improvement in the market. The revised price target reflects a decline to $68.00 from the earlier $73.00, with RBC Capital maintaining its Sector Perform rating.

Skyline Corporation, which operates in the manufactured housing and recreational vehicle industry, has been navigating through a challenging market environment.

The company's financial outlook for the Fiscal Year 2025 has been adjusted, with the anticipated Adjusted EBITDA now set at $246 million, a 4% decrease from the previous estimate of $259 million.

The firm's analysis suggests that the market's underperformance this quarter was noticeable, yet there is an indication of a rebound based on the first-quarter guidance provided by Skyline Corporation.

Despite this, the ongoing costs related to product liability and the uncertain demand within the housing community sector remain concerns that are influencing the firm's projections and the stock's price target.

In summary, RBC Capital's revised price target for Skyline Corporation reflects both the immediate financial adjustments due to increased expenses and the broader market challenges that the company faces. The Sector Perform rating indicates that the firm does not foresee significant stock performance deviation from the market average in the near term.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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