Generac Earns an Upgrade at BofA Securities, Shares Surge 5%

BofA Securities analysts upgraded Generac Holdings (NYSE:GNRC) to Neutral from Underperform with a price target of $110.00 (from $76.00), which led to more than a 5% increase in the stock price intra-day today.

The upgrade reflects the firm's position of stepping back as Generac's reduction in its home standby (HSB) channel stock appears largely complete.

The analysts expressed continued caution over the past few quarters due to Generac's strategy of reducing its HSB channel inventory, which resulted in lower recognized revenue. However, the company's third quarter of 2023 results exceeded expectations, particularly in the residential and commercial & industrial (C&I) sectors, driven mainly by improved HSB sales.

The analysts highlighted management's indications of sequential and annual growth in HSB revenues for the fourth quarter of 2023. Combined with the latest C&I results, this suggests that the company's guidance for the fiscal year 2023 is more achievable, pointing to a decreased risk for the company's shares.