Generac Holdings (GNRC) downgraded at Generac on supply chain challenges

November 25, 2022 10:54 AM EST
Get Alerts GNRC Hot Sheet
Price: $121.30 -0.93%

Rating Summary:
    19 Buy, 7 Hold, 4 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 11 | Down: 31 | New: 13
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Generac Holdings (NYSE: GNRC) was downgraded to Hold from Buy with no price target by Argus analyst John Eade on Friday.

Eade told investors that although the "well-managed" company has a long record of market outperformance and earnings growth, supply chain issues have emerged, challenging Generac's sales and margins for the next few quarters.

However, the firm's five-year rating on the stock is a Buy rating on the stock. Eade explained:

"Generac designs, manufactures, and sells power generation equipment, energy storage systems, and other power products for the residential and light commercial and industrial markets. Over the long term, we think that the company is well positioned to address the impact of climate change and energy market disruption, 5G deployment, and increased automation in manufacturing."

However, he added that from a technical standpoint, the "shares have been in a bearish pattern of lower lows and lower highs since October 2021."

"Compared to a group of peers that serve similar markets (FAST, ECL, WMX, OC), the shares are trading at below-average multiples, which we think is reasonable given the company's near-term growth challenges. We may look to get the GNRC shares back on the buy list as the installation capacity constraints ease," the analyst concluded.

By Sam Boughedda

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