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Shares of Thor Industries, Inc. (NYSE: THO) surged more than 15 percent to set a new 52-week high of $104.35 after its first quarter earnings handily beat Street view on significantly-better-than-expected revenue and slightly better gross margin performance.
Thor, which makes recreational vehicles (RVs), reported first quarter EPS of $1.49, ahead of the Street's expectation of $1.23 as it benefited from strong demand fueled by an ongoing replacement cycle, and the aging and retirement of America.
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However, BMO Capital remains on the sidelines with a Market Perform rating as it's still concerned about capacity constraints despite better execution from the company.
“We stand by our belief that the industry is capacity constrained, not necessarily from a brick-and-mortar standpoint as RV factories are relatively inexpensive, but from a labor standpoint – common sights during our travels through northern Indiana were "Help Wanted" signs,” analyst Gerrick Johnson wrote in a note.
The capacity constraints could result in higher costs towards labor, training and warranty. Johnson pointed out that Thor has been quietly adding to warranty reserves over the past few quarters, which are up nearly 94 percent year-over-year, likely to address potential issues that could arise as it continues to hire new workers.
“At this point, though, after a very strong run, we are now concerned that the company's valuation is such that the risk outweighs potential reward,” Johnson continued.
“While demand still looks strong, we would be hesitant to chase shares at near-$100,” Johnson added.
However, the analyst raised the price target to $102 from $80.
At last check, shares of Thor climbed 13.73 percent to $102.86 on a heavy volume.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.