On Wednesday, Raymond James made a bullish move on Camping World Holdings (NYSE:CWH), upgrading the stock from Market Perform to Outperform and setting a price target of $27.00.
The firm's optimism is rooted in the belief that Camping World is poised to achieve significant sales and adjusted EBITDA growth by 2025, independent of broader economic or industry trends.
The upgrade reflects confidence in Camping World's ability to continue gaining market share and the strategic emphasis on its higher-margin used RV segment.
Additionally, the firm cited a compelling mergers and acquisitions pipeline as a catalyst for growth. According to the analyst, these factors are key idiosyncratic drivers that should substantially improve the company's financial performance by 2025.
The analyst from Raymond James underscored that the Outperform rating is based on Camping World's potential to deliver robust financial results without relying on macroeconomic or industry-specific factors. This suggests that the company has strong fundamentals and internal strategies that could propel its growth.
Camping World's focus on the used RV segment is particularly highlighted as a major contributor to future growth. This segment traditionally offers higher profit margins, and an increased focus here could positively influence the company's profitability.
The price target of $27.00 reflects a significant upside from the current trading levels, indicating a positive outlook for the stock's future performance. This target is based on the anticipated financial improvements driven by the company's strategic initiatives and market position.
In other recent news, Camping World Holdings Inc . reported its third-quarter earnings and revenue, exceeding analyst expectations. The Illinois-based company posted adjusted earnings per share of $0.13, surpassing the consensus estimate of $0.11.
Additionally, revenue was reported at $1.7 billion, which outperformed analysts' projections of $1.64 billion. These recent developments indicate the company's continued growth with new and used same store unit sales returning to positive growth for the first time in 10 quarters.
However, the company saw a 4.7% YoY decline in total gross profit to $498.5 million, primarily due to lower average selling prices on new and used vehicles.
Despite this, Camping World maintained its quarterly dividend of $0.125 per share of Class A common stock. The company concluded the quarter with 207 retail locations, reflecting a net decrease of two stores from the prior year.
InvestingPro Insights
Recent data from InvestingPro adds depth to Raymond James' bullish outlook on Camping World Holdings (NYSE:CWH). The company's market capitalization stands at $1.95 billion, reflecting its significant presence in the RV industry. Despite a challenging year with revenue declining by 6.14% over the last twelve months to $6 billion, CWH has shown resilience, posting a strong 41.64% price total return over the past year.
InvestingPro Tips highlight CWH's commitment to shareholder value, having maintained dividend payments for 9 consecutive years. This consistency aligns with Raymond James' confidence in the company's financial stability. Additionally, the stock has seen a significant 9.89% return over the last week, potentially indicating growing investor optimism in line with the analyst upgrade.
While the company faces near-term profitability challenges, as evidenced by its negative P/E ratio, the focus on higher-margin used RVs mentioned in the article could address this issue. The price-to-book ratio of 18.13 suggests investors are pricing in future growth potential, supporting Raymond James' positive outlook.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into CWH's investment potential.
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