Guggenheim upgrades Generac to Buy on a possible solar biz exit

Investing.com -- Guggenheim raised its rating on Generac Holdings (NYSE: GNRC) to Buy from Neutral and set a $190 price target, saying the company has sharpened its focus on commercial power and there are signs it may scale back its struggling residential solar business.

“We believe that the potential for better performance from GNRC’s commercial business, as well as the possibility of rationalization in the troubled residential energy technology business, now merit a higher multiple. Also note the slightly more benign tariff environment,” analysts said.

The analysts at Guggenheim said Generac’s core home generator segment is showing gradual improvement, helped by better consumer sentiment and a more stable distribution network.

It also sees room for the commercial backup segment to gain traction, particularly in areas like small-scale data centers.

Guggenheim added that recent tariff-related costs may ease, and Generac has already raised prices to offset the impact, a dynamic that could support margins or volumes depending on how the company responds.

The note pointed to Generac’s poor track record in residential energy technology and said stepping away from that business would remove a drag on earnings and valuation.

While the firm noted its target multiples are above peers, it believes a clearer focus and fewer distractions justify the premium.

“Generac is now trading on 12.5x our 2025 EBITDA estimate and 11.4x our 2026 EBITDA estimate, which is close to the levels that we had previously identified as reasonable,” analyst at Guggenheim said.

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