Analyst: Camping World Could Have Near-Term Benefits From RV Production Slowdown

Camping World Holdings Inc CWH and other RV dealers are expected to benefit in the near-term from a possible deceleration in the production of recreational vehicles, resulting in a mismatch between manufacturer shipments and retail sales, according to Bank of America Merrill Lynch.

The 2019 expectations that call for mid-single digit growth in RV retail sales do hold risk, the sell-side firm said. 

The Analyst

BofA’s John Lovallo II initiated coverage of Camping World Holdings with a Neutral rating and $15 price target.

The Thesis

Camping World Holdings is the largest dealer of new and used RVs in the U.S. Inventory issues through at least the third quarter are likely to cause an RV production slowdown, benefiting dealers in the near term, Lovallo said in the Tuesday initiation note. 

The company sells products that are largely discretionary and are therefore subject to significant cyclicality, the analyst said. The primary demand drivers — such as consumer confidence, household wealth, wage growth and availability of credit — seem “reasonably supportive,” he said. 

Both millennials and baby boomers are focused on healthy living and a desire for outdoor activities, which supports an expanding market opportunity for RVs, Lovallo said. 

The analyst pointed out that Camping World Holdings had its IPO in 2016 and has never faced an industry downturn as a public company.

Price Action

Camping World shares were up 0.81 percent at $13.75 at the time of publication Tuesday. 

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