Blue Bird Corp (NASDAQ: NASDAQ:BLBD), a manufacturer of school buses, has received a price target increase from Roth/MKM, raising it to $48.00 from the previous $43.00, while retaining a Buy rating on the stock.
The adjustment comes in the wake of Blue Bird's financial results for the third quarter of fiscal year 2024, which surpassed expectations.
The company's performance for the quarter was notably strong, with gross margins exceeding analyst predictions by 380 basis points. This significant margin led to adjusted earnings per share (EPS) that were $0.34 higher than anticipated. Additionally, Blue Bird experienced a year-over-year increase of 13% in average selling prices (ASPs).
Management confirmed during the earnings call that all current backlogs are priced at the prevailing rates and that the company's pricing trajectory is outpacing costs. Based on Blue Bird's consistent track record of surpassing financial expectations, Roth/MKM has revised its forecasts upward to account for the anticipated continuation of gross margin outperformance.
The updated projections from Roth/MKM suggest that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will slightly exceed the company's own guidance.
Despite the positive adjustments, the firm expressed a note of caution due to a slowdown in electric school bus (EVSB) deliveries and lukewarm backlogs, which could indicate potential challenges ahead.
Blue Bird Corporation recently announced significant changes in its leadership structure and business strategy. Britton Smith is set to take over as President & CEO, succeeding Phil Horlock, with Doug Grimm named as the new Chairman of the Board. These changes follow Smith's successful lead in the company's electric vehicle segment growth strategy.
InvestingPro Insights
The recent price target increase for Blue Bird Corp (NASDAQ:BLBD) by Roth/MKM aligns with the company's strong financial performance and optimistic projections. According to InvestingPro, Blue Bird's market capitalization stands at $1.56 billion, reflecting its significant presence in the industry. The company's P/E ratio of 19.39 indicates a valuation that investors are willing to pay for its earnings, which is further substantiated by an adjusted P/E ratio of 19.23 for the last twelve months as of Q2 2024.
Blue Bird's revenue growth of 26.17% over the last twelve months, as of Q2 2024, demonstrates the company's ability to expand its sales effectively. The growth is also evident on a quarterly basis, with a 15.38% increase reported in Q2 2024. This revenue growth is a testament to Blue Bird's successful pricing strategy and product demand, complementing the Roth/MKM's observations about the company's ability to outpace costs with its pricing trajectory.
InvestingPro Tips highlight that Blue Bird's stock has experienced a high return over the last year, with a year-to-date price total return of 79.71% and a one-year price total return of 129.95%. This performance is a crucial factor for investors considering the stock's potential for continued growth. Additionally, analysts have revised their earnings upwards for the upcoming period, signaling confidence in Blue Bird's future profitability. For those interested in further insights, there are additional tips available on InvestingPro's website for Blue Bird Corp.
Overall, the InvestingPro data and tips provide a more comprehensive understanding of Blue Bird's financial health and market performance, reinforcing the positive outlook presented by Roth/MKM's analysis.
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