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Wunderlich Downgrades Thor Industries, Sees Industry Soon Exceeding Peak Historical Level

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Wunderlich Downgrades Thor Industries, Sees Industry Soon Exceeding Peak Historical Level
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Following their outperformance over the recent quarters, shares of Thor Industries, Inc. (NYSE: THO) are now trading at a 10–20 percent premium to the leading recreational and leisure vehicle peers.

Wunderlich’s Rommel Dionisio downgraded the rating on the company from Buy to Hold, with a price target of $80.

Valuation Too High

Given the premium valuation of the stock and “with the RV industry already set to exceed peak 2006-unit shipment levels this year and Thor likely having to digest the significant Jayco acquisition over the next few quarters,” Dionisio believes that “the time is now right for investors to take profits on the stock.”

The analyst noted that Thor Industries’ current premium was “historically unusual,” given that the stock has traded at a 10–15 percent discount to the market leaders over the past several years.

Related Link: How Did Airliners Perform In July

Poised To Peak

On the other hand, Dionisio believes the U.S. RV industry, which reached its peak wholesale unit shipment levels in 2006, was poised to surpass these peak levels, with 418,000 unit shipments expected for full-year 2016.

Unit shipments in the RV industry have grown 11.7 percent year-to-date, a trend that is likely to continue.

Slow Acquisition Pace

“Thor, the RV industry’s largest producer, announced the acquisition of Jayco, the industry’s third-largest player, a transaction which should increase Thor’s revenue by about 40 percent,” Dionisio mentioned.

However, the analyst believes acquisition flow would slow for the next several quarters, while Thor Industries digests this large Jayco acquisition.

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Latest Ratings for THO

DateFirmActionFromTo
Oct 2018CitigroupMaintainsBuyBuy
Aug 2018Sidoti & Co.MaintainsBuyBuy
Jun 2018CitigroupMaintainsBuyBuy

View More Analyst Ratings for THO
View the Latest Analyst Ratings

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