Winnebago Rides The Road To Recovery: Analyst Boosts Target Amid Signs Of Revival

Truist Securities analyst Michael A.Swartz reiterated a Buy rating on the shares of Winnebago Industries Inc WGO and raised the price target from $70 to $85.

With regard to Q1 FY24, profitability was unfavorably impacted by a range of items, including higher variable comp expense, IT/systems investments, Grand Design motorized start-up costs and transitory inefficiencies within the Motorized RV business, says the analyst.

Also, there was unfavorable absorption and higher discounting & promotional allowances across all of WGO's segments, adds the analyst.

Despite the softer-than-anticipated 1Q print, WGO's outlook for the coming year was generally unchanged, notes the analyst.

Also, WGO indicated that over the past 30-60 days, retail demand for several of its key brands has turned positive on a Y/Y basis and that it has begun to see lot share gains stemming from dealer stocking optimization efforts, writes the analyst.

According to the analyst, WGO's expectation of its Towable RV average selling price decline of over 10% is a factor of less favorable model mix rather than any degradation in pricing power.

Overall, the analyst has a sense that company specific factors drove Q1's underperformance, inventory destocking is largely complete (RV), and WGO should return to market share growth in the year ahead. 

Price Action: WGO shares are trading higher by 2.07% at $72.42 on the last check Thursday.

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