BMO Downgrades Camping World: 'We're Concerned About The Overall Direction Of The Company'

Overall weakness in the RV industry is weighing on Camping World Holdings Inc CWH, according to BMO Capital Markets. 

The Analyst 

Gerrick Johnson downgraded Camping World from Outperform to Market Perform and lowered the price target from $20 to $11.

The Thesis

With channel inventory at higher-than-desired levels, Johnson said in the Friday downgrade note that he has growing concerns that the RV industry may be taking longer than anticipated to "right-size." (See the analyst's track record here.) 

“We are also more concerned about the overall direction of the company, owing to its ever-changing strategy, particularly its evolution since the acquisitions of assets of Gander Mountain out of bankruptcy," he said. 

Finding equilibrium in the U.S. RV market may be taking longer than anticipated, with dealer inventory levels falling lower and Camping World's same-store inventory down 20 percent, Johnson said. 

“While an improvement, we think there is still work to be done, as retail has continued to lag expectations," he said. 

BMO is also concerned about Camping World’s loss of RV new unit market share after losing share on a same-store basis in a declining market — and does not expect this trajectory to change.

The analyst said BMO had the opportunity to shop several Gander Outdoors stores and has come away unimpressed, seeing little competitive advantage that would allow the retailer to meaningfully grow its top line. 

“In spite of these concerns, we think the stock’s depressed valuation, general market knowledge of the issues the company faces, and investor hope for longer-term improvements may provide a floor for the stock," Johnson said. 

Price Action

Camping World shares were down 1.99 percent at $11.85 at the time of publication Friday. 

Related Links:

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

Camping World Downgraded By Goldman Sachs, Fear Of RV Industry Slowdown Persists

Photo by PeRshGo via Wikimedia.