Toro slashed to Neutral at DA Davidson, shares drop

Toro (NYSE: TTC) shares fell more than 5% intra-day today after DA Davidson downgraded the company to Neutral from Buy and cut its price target to $87.00 from $110 following a comprehensive analysis, including a quarterly golf course management survey and checks with dealers and industry peers.

Specifically, Toro and Ditch Witch dealers anticipate a decline in retail performance in 2024. Additionally, a notable competitor in the TTC Professional segment has expressed significant caution regarding the fiscal year 2024, predicting a revenue decrease next year.

“Just before Thanksgiving, we heard from Deere (DE, BUY), a key TTC competitor in some markets, about its FY:24 outlook. For its Small Ag & Turf business, the company expects a revenue decline of 10%-15%. While the two businesses do not overlap entirely, our prior TTC model expected a 9% increase in Professional. This, among the other findings in this note, caused us to reconsider our estimates,” commented the analysts.

Furthermore, the golf course survey indicated continued positive sentiment, aligning with peer comments. However, there's a slight shift in capital expenditure intentions.

Despite the potential for significant growth in the Residential segment, particularly with a pending substantial ship-in to Lowe's for the Spring, which could reach nine figures, estimates are being cautiously adjusted, leading to a new price target of $87, near where Toro trades today.

By Davit Kirakosyan

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