DA Davidson Raises Winnebago Industries Price Target Following Earnings Release

Summary

  • DA Davidson increases the Winnebago Industries (WGO) (NYSE:) share price target by $4 to $64, maintaining a Neutral rating on the stock.
  • The amended target comes after WGO’s recent earnings announcement.
  • Analysts indicate that WGO’s earnings missed target, expressing careful viewpoint regarding second-quarter outlook.
  • WGO posts 1Q24 adjusted EPS of $1.06 on revenues of $763 million – a 19.9% decline YoY due to a combination of market conditions, product blend, and rising discounts and allowances.
  • Despite the absence of an official EPS direction, WGO hints at sequential sales and profit drop in 2Q24.
  • WGO anticipates a weak second quarter due to a considerable production halt during much of the holiday season for inventory destocking by dealers.
  • WGO anticipates CY24 retail units and wholesale consignments to hit ~350,000 units approximating a 1:1 restocking pattern.

Increased Price Target for WGO

DA Davidson revised the price target for Winnebago Industries (NYSE:) upwards from $60 to $64 per share in a Tuesday note, sticking to a Neutral position on the stock. The upscaling follows shortly after the unveiling of the firm’s latest earnings outcomes.

Identifying Missed Expectations

According to analysts, the company’s performance fell short of the projected results, with a prudent outlook offered for the second quarter.

Revenue Decrease Explained

The first quarter of 2024 saw WGO posting an adjusted EPS of $1.06 on revenues worth $763 million, reflecting a 19.9% decline on an annual basis. Such an income dip is attributed to reduced unit sales influenced by market conditions, product assortment, as well as escalated discounts and allowances, as explained by DA Davidson.

Stock Performance

Although no formal EPS guidance was provided by WGO, indications from the company suggest an impending decrease in both sales and profitability sequentially in the second quarter of 2024. This is in line with the contemplative outlook stated earlier. As per the earnings call, it is expected that sales for 2Q24 will be lower in comparison to 1Q24, and EBITDA margins will also reduce sequentially.

Company Forecast

The company’s guidance implies a seemingly difficult quarter for WGO as production is predicted to halt for a substantial part of the festive season to facilitate dealers in destocking inventory, according to analysts. WGO anticipates retail units and wholesale shipments for CY24 to be approximately 350,000 units, depicting a 1:1 restocking model.

The performance and future outlook for Winnebago Industries could potentially influence the trading strategies of investors in this sector, impacting trading assets such as NYSE-listed company stocks and other related financial instruments.

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