On Friday, Citi updated its stance on MarineMax (NYSE:HZO), a leading recreational boat and yacht retailer, by increasing the price target to $40.00 from the previous $26.00, while keeping a Neutral rating on the stock.
This adjustment followed MarineMax's announcement of third-quarter earnings that surpassed expectations, coupled with the company's ability to maintain its guidance amid widespread reductions by other firms in the powersports sector.
MarineMax reported a notable 17% rise in its share price on Thursday, in contrast to a slight 0.5% dip in the S&P 500 index. The company's top-line results exceeded forecasts, and its same-store sales (SSS) outlook remains unaltered. MarineMax experienced flat unit sales, which stands out in an industry that is currently seeing double-digit sales declines.
The firm also delivered a stronger bottom-line performance. Despite the need for increased promotional activities, MarineMax managed to counterbalance these costs with effective cost reduction strategies. The company's ability to maintain profitability in a challenging market has been recognized by Citi's latest price target revision.
MarineMax's financial success, as indicated by the third-quarter results, showcases the company's resilience and strategic management during a period when other companies in the powersports industry are facing downward pressures.
The maintained guidance and stable unit sales, despite industry-wide challenges, have contributed to the positive outlook reflected in the revised price target by Citi.
In other recent news, MarineMax reported a 5% increase in revenue for the third quarter of fiscal year 2024, driven by aggressive marketing strategies and promotions.
Despite a decline in gross margins to 32% due to higher promotional activities, strategic acquisitions have expanded the company's customer base and geographical reach. In light of these developments, MarineMax reaffirmed its full-year guidance, indicating confidence in its business model and cost-saving measures.
The company also launched a SuperYacht Division to enhance service offerings and expects cost-cutting initiatives to result in future savings. Adjusted net income guidance for FY2024 remains at $2.20 to $3.20 per diluted share, with adjusted EBITDA projected to be between $155 million and $190 million.
MarineMax anticipates saving $20-25 million from the closure of some dealerships and other cost reductions. The company's outlook suggests a sustained gross margin at or above 30% and a positive trend in same-store sales. Despite industry challenges, the company's acquisition strategy will continue, albeit at a potentially slower pace.
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