HLLY - Holley stock extends decline as more analysts trim targets

Holley Inc. ( NYSE: HLLY ) stock marked yet another double-digit decline on Monday as more analysts cut ratings on the name.

Shares of the Bowling Green-based manufacturer fell nearly 21% at the intraday low on Monday, adding to a 36.94% decline for the stock on Friday.

Last week’s steep slide was motivated by the release of its second quarter preliminary results, which reflected softening sales and slashed full-year guidance.

“Second quarter sales fell short of expectations, driven by microchip shortages and other supply chain challenges that prevented us from building and shipping many of our most popular products,” CEO Tom Tomlinson explained. “Growth in DTC sales was more than offset by resellers that reduced their purchases below their out-the-door sales levels, indicating that some sell-down of reseller inventory also occurred in the quarter. This is all against the backdrop of challenging economic conditions and softening consumer demand.”

Following the surprisingly pessimistic report, multiple analysts slashed their guidance on the stock as well.

For example, Raymond James analyst Joseph Altobello reduced his price target on the stock from $14 to $10 as he suspects supply chain problems are likely to constrain the stock for the foreseeable future. Likewise, Bank of America analyst Alexander Perry downgraded the name from “Buy” to “Neutral” and reduced his price target to $9 from a prior $13.

“We believe consumer inflationary pressure may limit near-term spending on more discretionary categories that Holley participates in,” Perry explained. “According to web traffic data from Similar Web, visits were -6% y/y for Holley.com in June, which was a deceleration from -2% in May, while visits to Jegs.com one of Holley’s largest customers declined 3% in June a deceleration from +11% in May.”

The stock remains significantly shorted. Per SeekingAlpha data, 11.74% of its float is held short.

Read more on the details of the preliminary earnings release .

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