Shares of Traeger (COOK) are down more than 20% in premarket trading Thursday after the company released weaker-than-expected FY2022 guidance.
Traeger reported Q4 adjusted EPS of 3c, compared to the expected loss per share of 4.9c. Revenue in the fourth quarter came in at $174.9 million, topping the consensus estimates of $156.6 million.
The gross margin was 37.4% in the period, compared to the analyst consensus of 35.1%. Traeger reported Q4 adjusted EBITDA of $13.8 million, topping the consensus projection of $9.08 million.
For the full fiscal 2022, Traeger expects revenue in the range of $800 million to $850 million, significantly below the consensus estimates of $954.8 million. Adjusted EBITDA is expected in the range of $70 million to $80 million, missing the estimated $112 million.
"Full-year guidance reflects a moderation in year over year sales growth driven by comparing against two years of accelerated retail activity and the impact of inflationary pressures and geopolitical turmoil on consumer sentiment and discretionary spending, as well as gross margin pressures due to global supply chain challenges," the company said.
Stifel analyst Jim Duffy downgraded COOK shares to Hold from Buy and slashed the price target to $7.50 per share from $26.00.
"Commentary on trends early in the grill selling season suggest category declines with the anniversary of stimulus and elasticity to price increases. Declining grill revenue in combination with supply chain/logistics related margin pressure weigh heavily on profitability and change the leverage profile adding risk to the equity (5.6x forward 2022E Adj. EBITDA, projected to 3.7x in FY23E). At the current share price, we do not believe shareholders are being adequately compensated for these risks," Duffy said in a client note.
Morgan Stanley analyst John Glass cut the price target to $10.00 per share from $26.00 while staying Equal-weight.
"Even against lowered market expectations (COOK shares are now down over 50% from the IPO price), FY22 guidance was meaningfully below our prior view. While we - and the market - had appreciated the cost pressures mounting in the business (and specifically for inbound freight, which has weighed on gross margins at an increased rate through 21, and now also higher input prices, neither unique to COOK), grill demand is now softening post-Covid bump as we enter '22 to a greater extent than previously assumed," Glass wrote in a memo.
Trager stock price closed at $8.80 yesterday.
By Senad Karaahmetovic