Briggs & Stratton (BGG): Tie Goes To The Bulls - Baird

Baird analyst, Timothy Wojs, reiterated his Neutral rating on shares of Briggs & Stratton (NYSE: BGG) but believes guidance is better than expected (or feared). Power Products revenue offset weaker Engine performance while F2019 EPS guidance bracketed consensus but was mixed with revenue stronger than estimates but EBIT margins lighter. Considering the low expectations however, the analyst believes this to be a modest win.

The analyst noted that stronger Products performance was offset by weaker Engine trends as the company experienced a 17% reduction in engine shipments. The analyst stated "We believe risk/reward is balanced over the next 12 months. Management has outlined some longer-term financial targets and outlined its commercial growth initiatives. But with the targets implying revenue growth acceleration and meaningful margin expansion, we prefer to see some initial traction play out".

No change to the $20 price target, which is based on a 6.5X C2019 EBITDA of ~$170m. The target multiple is slightly below with BGG’s historical average multiple (~7X), but appropriate considering near-term earnings challenges and limited EPS visibility.

For an analyst ratings summary and ratings history on Briggs & Stratton click here. For more ratings news on Briggs & Stratton click here.

Shares of Briggs & Stratton closed at $18.41 yesterday.

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