Latham Group slides as William Blair downgrades stock on macro headwinds

Investing.com -- Latham Group Inc (NASDAQ: SWIM) shares tumbled over 7% Thursday morning after William Blair downgraded the pool manufacturer, warning that elevated interest rates and rising transport costs will likely weigh on demand and compress margins over the coming years.

William Blair analyst Ryan Merkel lowered his rating on the fiberglass pool maker from Outperform to Market Perform, pointing to overly optimistic Wall Street expectations for 2027. Merkel set his 2027 EBITDA forecast for Latham at $112 million, 12% below consensus estimates, driven by expectations of softer sales volumes and persistent cost pressures.

Against that backdrop, the broker anticipates the broader new pool market will shrink again in 2027 as sustained high interest rates dampen consumer spending on big-ticket home improvements. For its part, Latham faces unique logistical headwinds given that shipping oversized fiberglass pools relies heavily on specialized freight and fuel, both of which are seeing upward cost pressure.

While Merkel noted that the fundamental long-term thesis for fiberglass pool adoption remains intact, near-term valuation metrics present another hurdle for investors. The analyst warned that Latham’s valuation multiple may face pressure to de-rate toward industry peers, making outperformance difficult to achieve against an unhelpful macroeconomic environment.

Original Article

You May Also Be Interested In

• GEN Restaurant Group stock surges on $100M asset sale to Chubby
• Insurance Stocks: Wells Fargo Names Top Tactical Ideas Into Q3 Earnings
• UBS sticks to buy-dollar-on-dips call. Here is why