By Senad Karaahmetovic
BofA analysts downgraded Generac (NYSE:GNRC) to Underperform from Neutral with the price target going to $91 per share from the prior $141.
The new price target signals a downside risk of nearly 19% relative to yesterday’s closing price.
Analysts see several concerns, including worsening fundamentals and sustained macro pressures, which negatively skew risk reward.
“The weakening consumer and idiosyncratic operational challenges are key drivers of our now more pessimistic outlook. Although investors argue mgmt. “kitchen sink’ed” expectations, we flag aggressive guidance, lofty consensus estimates (FY23 EBITDA: BofAe $466 mn vs. consensus $630 mn), and risk of further multiple compression,” the analysts said in a client note.
They would like to see “quantitative signs of execution” before crediting the management with a “lofty recovery” that is already embedded in guidance.
“Together, we see a nonzero percent risk of a guidance cut, since guidance did not contemplate a hard landing, and we flag risk of disappointment to consensus estimates,” the analysts concluded.
GNRC shares are down 5.8% today.