Winnebago Shares Rose After Earnings, But Baird Thinks Fundamentals Are The Same

Winnebago Industries, Inc. WGO shares appreciated 6 percent following the robust results announced by the company.

Baird’s Craig R. Kennison maintains a Neutral rating on the company, with a price target of $25.

Robust Results

Kennison believes the revenue earnings upside reported by the company “is attributable to a legal settlement and the timing of rental shipments, which have little impact on our fundamental outlook.”

The analyst also believes there is potential for a turnaround, led by the new CEO, Mike Happe, “who brings fresh ideas and a disciplined management approach to the iconic RV manufacturer.”

Related Link: Winnebago Reports Q3 EPS $0.53 Vs. $0.45 Est

The EPS for the quarter beat expectations, driven by a legal settlement and early rental shipments.

Although management indicated demand “picked up significantly in May,” the analyst believes revenue beat the estimates due to the timing of rental shipments, as well as strong towable growth of 27 percent.

Strong Leadership

“The leadership transition led by new CEO Mike Happe strikes the right chord with us,” Kennison said, while adding, “We expect management to formalize a fresh strategic vision later this year, emphasizing strategy, people, and processes.”

In addition, Winnebago has hired Ashis Bhattacharya to head strategic planning and business development.

Kennison believes Bhattacharya appears open to ideas to accelerate growth, particularly in towables.