Generac Analyst Turns Bearish, Says Guidance Is 'Out Of Reach'

Shares of Generac Holdings Inc. GNRC fell in the premarket on Friday and continue to fall.

The company’s guidance for fiscal 2023 seems ambitious and increasingly out of reach, with pressures in the residential segment mounting, according to BofA Securities.

The Generac Holdings Analyst: Julien Dumoulin-Smith downgraded the rating for Generac Holdings from Neutral to Underperform, while slashing the price target from $141 to $91.

The Generac Holdings Thesis: Although management believes the current channel inventory congestion will ease by the second half of 2023, “this recovery is difficult to underwrite when latest winter storms do not accelerate inventory drawdown,” Dumoulin-Smith said in the downgrade note.

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“Into a deteriorating macro environment with a strained resi consumer,” Generac’s highest margin product (HSB) could underperform on volumes and pricing, the analyst added.

Generac is likely to announce a guidance cut since its estimates “did not contemplate a hard landing,” and the company is at risk of missing the current consensus estimates, he further stated.

GNRC Price Action: Shares of Generac Holdings declined by 6.28% to $107.95 Friday morning.

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