HLLY - Holley stock dips on downgrade from DA Davidson

DA Davidson analyst Michael Baker cut his rating on Holley Inc. ( NYSE: HLLY ) to Neutral from Buy, voicing concerns on lofty expectations for the company.

Despite a Q4 pre-announcement and the retirement of its CEO earlier this month, the stock remains in positive territory year to date. This trend, as well as estimates that Baker believes are still too high, balance the risk/reward dynamic, in his view.

“With the company having already guided down 4Q22, expectations are relatively low, but HLLY continues to trade at a fairly healthy multiple on both a P/E and EBITDA basis, suggesting that there could still be some near term downside in the shares,” he explained. “Longer term, we believe in HLLY’s business, which features strong customer affinity, a favorable target consumer demographic and strong profit margins. But, shorter term, we fear another leg down on guidance that we think will be below consensus.”

Shares of the Kentucky-based auto parts manufacturer fell 2.22% in premarket trading on Tuesday.

Both Seeking Alpha’s Quant team and Seeking Alpha authors rate the stock a Strong Sell ahead of its expected earnings results .

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