According to Truist, it’s time to sell Generac amid bigger macro challenges this year. Analyst Jordan Levy downgraded the stock to hold from buy, saying higher interest rates and inflation hurt the power generator maker’s outlook. “When GNRC tries to return its HSB [home standby generators] & clean energy to strong growth in 2H:23, we see high interest rates coupled with higher product prices prolonging the recovery and posing a significant risk to the company’s financials in 2023,” Levy wrote in a note on Monday. “Revising our estimates for a slower sales recovery HSB and clean energy, we now forecast FY23 revs/EBITDA ~3%/~9% below the Street,” Levy added. Generac shares are higher this year, up 25% in 2023 and outperforming the S & Zisk P 500. However, the analyst expects that the stock could fall from there. Levy cut his price target to $145 from $160, meaning the stock has about 14% upside from Friday’s close of $126.77. The stock was down 3% in premarket trading Tuesday. “Internal GNRC’s challenges, both related to its core home backup generator (HSB) business and emerging clean energy products, have been discussed at length by mgmt over the past several quarters, and we believe the Street understands them well,” Levy wrote.” For now mco we see a path to recovery for both HSB and clean energy, we believe short-term macro and market headwinds pose an increased downside risk to a return to 2H:23 growth and could extend the recovery period,” Levy added. The downgrade comes after a similar decision by another Wall Street firm. On Friday, Wells Fargo downgraded the stock to equal from overweight, saying Generac could miss its 2023 plan. —CNBC’s Michael Bloom contributed to this report.
Truist Downgrades Generac, Says Higher Interest Rates Could Hurt Power Generator Maker This Year
