The Generac Opportunity: Why A Post-Earnings Sell-Off Creates An Attractive Entry Point, According To This Analyst

Truist Securities analyst Jordan Levy upgraded Generac Holdings Inc GNRC to Buy from Hold at a $160 price target following Q2 FY23 results.

The analyst believes around 30% post-earnings sell-off may create an attractive entry point for investors.

This week, the company reported a Q2 sales decline of 23% year-on-year to $1.00 billion, above the consensus of $985.02 billion, and adjusted EPS of $1.08, missing the analyst consensus of $1.16.

The analyst revised FY23 revenues to $4.05 billion (from $4.14 billion prior and consensus: $4.09 billion) and EBITDA estimate to $643 million (from $640 million, vs. street $650 million).

For FY24, the analyst expects a gross margin expansion to 36% (prior 33% vs. street 35.6%) with a higher residential segment revenue (+15% Y/Y), recovery in home standby generators (HSB) & moderation in C&I growth.

The analyst expects a 4% increase in the FY24 EBITDA to $848 million (from $819 million prior) vs. consensus of $833 million. 

Levy expects FY25 EBITDA of $976 million (from $949 million earlier and a consensus of $934 million).

Also Read: What Generac's Earnings May Say About The Strength Of The Economy

Price Action: GNRC shares are trading higher by 2.7% at $113.86 on the last check Friday.