On Tuesday, Canaccord Genuity increased its price target for Generac Holdings Inc. (NYSE:GNRC) shares to $177.00, up from the previous $150.00, while maintaining a Buy rating.
The decision comes in the wake of Hurricane Beryl's significant impact on Texas, signaling the start of what could be an intense hurricane season. The firm anticipates Generac will deliver a solid performance for the second quarter of 2024 and expects the company to reaffirm its guidance during its upcoming earnings report.
Canaccord Genuity's revised price target is based on an updated non-GAAP earnings estimate for 2026, which currently stands at $11.83. The firm applied an approximate 15x earnings multiple, consistent with comparable companies.
Generac's revenue is projected to grow at a rate three times that of its peers, approximately 12% versus 4%, between 2023 and 2026. Earnings per share (EPS) are also expected to increase at a similar pace, roughly 30% compared to the 11% of its comparison group during the same period.
Generac, known for its dominant position in the home standby generator (HSB) market, holds an approximate 70% market share. The company is recognized for its strong brand and is poised for continued secular growth with mid-single digit product penetration in its core market. Moreover, the company's clean energy division, including partnerships with Ecobee and Wallbox (NYSE:WBX), is anticipated to make significant progress from a relatively small base.
The firm's positive outlook on Generac is further bolstered by the potential for increased grid instability, partly due to the emergence of AI technologies. Generac is considered well-positioned to benefit from these developments.
Additionally, the company is believed to be approaching a low point in year-over-year growth trends for both revenue and earnings as it transitions into the second half of 2024.
In other recent news, Generac Holdings reported a slight increase in net sales to $889 million in Q1 2024, driven by a 2% growth in residential product sales. However, the company also experienced a 2% decline in global commercial and industrial product sales. Despite these mixed results, Generac projects sales growth between 3-7% and an improvement in gross margins by 300-350 basis points for 2024.
In other company updates, Generac confirmed the results of its recent annual meeting of shareholders. Key issues voted on included the election of directors, ratification of the company's independent auditor, and approval of executive compensation and an equity incentive plan.
Analyst ratings for Generac have seen some changes recently. Truist Securities raised the stock's price target for Generac to $170.00 from $160.00, maintaining a Buy rating.
This decision followed discussions with Generac regarding the home standby market dynamics and the company's 2024 guidance and new product strategies in the Energy Technology segment.
Conversely, JPMorgan downgraded Generac's stock from Overweight to Neutral, reducing its price target to $149.00, citing the stock's significant year-to-date performance. Similarly, Oppenheimer downgraded Generac from an Outperform to a Perform rating as the company's stock price surpassed the previously set target of $145.
These are recent developments in Generac's business operations and market performance.
InvestingPro Insights
In light of Generac Holdings Inc.'s (NYSE:GNRC) recent focus by analysts, real-time data from InvestingPro provides a comprehensive view of the company's financial health and market performance. With a substantial market capitalization of $9.38 billion, Generac is trading at a high earnings multiple, with a P/E ratio of 42.11, slightly adjusted from the last twelve months as of Q1 2024 to 41.13. This reflects the market's optimism about the company's earnings potential, especially considering that Generac's liquid assets exceed its short-term obligations, suggesting financial resilience.
While the company's revenue has seen a slight decline of 6.78% in the last twelve months as of Q1 2024, Generac's strong market performance is evident with an impressive 33.26% price total return over the last six months. This is complemented by a significant return over the last week of 8.38%, indicating positive investor sentiment. Generac is also trading near its 52-week high at 98.3% of the peak price, signaling that the market recognizes the company's value and growth potential.
For investors looking to delve deeper into Generac's prospects, there are additional InvestingPro Tips available, including insights into the company's debt levels, profitability predictions, and historical returns. Readers interested in these valuable metrics can find more tips on InvestingPro. To gain full access to these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With the upcoming earnings report and the heightened focus on energy reliability, these insights could be crucial for informed investment decisions.
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