- Raymond James analyst Joseph Altobello reiterated an Outperform rating on the shares of MarineMax Inc HZO, reflecting the belief that the company should continue to gain market share in a generally healthy (albeit slowing) U.S. marine industry.
- Meanwhile, the analyst lowered the price target from $55 to $40 by applying a more conservative P/E approach reflecting the heightened macroeconomic and industry uncertainty.
- MarineMax reported Q1 results Thursday morning that were below expectations, as revenue contributions from recent acquisitions offset a modest decline in same-store sales but were not enough to overcome higher SG&A and interest expense, said the analyst.
- For the quarter, adj. EPS declined 22% y/y to $1.24, well below the analyst's estimate of $1.43 and the Street consensus.
- Management indicated the recent softness in demand across the industry is likely reflective of a return to more normal seasonality as well as a more challenging economic environment, noted the analyst.
- Encouragingly, HZO's focus on larger and more premium products should help to insulate it somewhat from these industry pressures, while robust ASP expansion owing largely to favorable mix nearly offset this unit decline, said the analyst.
- Gross margins expanded 140 basis points y/y to 36.8%, well above the analyst's estimate of 35.0% as boat margins remained resilient and were boosted by IGY.
- HZO ended the quarter with inventories of $605 million, up 33% q/q and 86% y/y, driven largely by smaller and less complex products, while supply of larger, more complicated products are expected to remain lean through F23, said the analyst.
- Given the economic uncertainty and softening demand, HZO now expects the industry to be down high single digits in 2023 versus down mid-single digits prior.
- Price Action: HZO shares are trading higher by 0.43% at $30.50 on the last check Friday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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