On Thursday, Telsey Advisory Group adjusted its outlook on Traeger Inc. (NYSE:COOK), reducing the 12-month price target to $4.00 from the previous $4.50. The firm retained its Outperform rating on the stock.
The revision followed Traeger's first-quarter 2024 earnings, which, despite a revenue decline of approximately 5.4%, surpassed the FactSet consensus estimate that predicted a 6% drop. Traeger's adjusted EBITDA for the quarter matched Telsey's projection of $24 million and exceeded the FactSet consensus of $22 million.
Traeger's quarterly results fell within the company's own guidance, prompting it to uphold its full-year 2024 sales and adjusted EBITDA forecast. However, the company exercised caution regarding the demand for grills, noting a year-over-year downturn in the category. The consumer trend towards lower-priced grills, specifically those under $1,000, is affecting average selling prices (ASPs).
Despite the challenging market conditions, Traeger is concentrating on operational efficiencies and strategies to stimulate growth. The company aims to elevate brand recognition through marketing, foster customer loyalty, innovate with new products and adjacent categories, increase recurring revenue from consumables and grocery distribution, and pursue international expansion.
The Telsey analyst cited these initiatives as reasons for maintaining the Outperform rating. Nonetheless, the price target adjustment reflects a revised 2024 EBITDA estimate of $68 million, a decrease from the initial $70 million. The valuation multiple remains constant at approximately 13 times the projected EBITDA.
InvestingPro Insights
As Traeger Inc. (NYSE:COOK) navigates a dynamic market landscape, real-time data from InvestingPro provides further context to Telsey Advisory Group's revised price target. With a market capitalization of $292.17 million and a price-to-book ratio at the close of Q1 2024 standing at a modest 0.99, Traeger presents an interesting case for investors considering entry points into the home appliances sector. Notably, the company's revenue growth was recorded at 2.1% in the last twelve months as of Q1 2024, indicating resilience amidst challenging market conditions.
InvestingPro Tips highlight that while analysts have recently revised their earnings expectations downwards, they also predict that Traeger will turn profitable this year. Moreover, the company's strong free cash flow yield and the fact that liquid assets exceed short-term obligations offer a degree of financial stability. However, it’s worth noting that Traeger does not pay dividends, which could be a consideration for income-focused investors. For those looking to delve deeper into the financial health and future prospects of Traeger, InvestingPro offers over 8 additional tips, which can be accessed with the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
With the current share price at $2.30, which is 33.88% of its 52-week high, and an InvestingPro fair value estimate of $2.58, Traeger's stock might appeal to value investors. The company's next earnings date is set for September 5, 2024, which will be a critical time for investors to assess whether the company's strategic initiatives are translating into financial performance.
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