PTON - Leisure stocks are at risk of macro headwinds but some names could stand out

2023-04-19 09:19:05 ET

KeyBanc Capital Markets dove into the leisure sector on Wednesday with a number of new ratings.

The overall view from the firm is that macro headwinds could continue to ratchet up with the perfect storm of high inflation, tighter lending via elevated rates and mounting job cuts/hiring freezes in the mix. With that in mind, KeyBanc said it is using a cautious and a particularly selective lens for exposure to discretionary leisure stocks, with a relative preference toward higher income consumers. Looking beyond just the macro backdrop, KeyBanc factored in post-COVID dynamics and gave merit to accelerated structural shifts to leisure, health, and experiences, along with associated products.

Brunswick ( BC ) landed an Overweight rating and price target of $100. The marine recreation company's diversified revenue streams and momentum in engines are said to offer near-term and medium-term opportunity amid the macro volatility.

Camping World ( NYSE: CWH ) also earned an Overweight rating and was given a price target of $25. "We think CWH’s idiosyncratic setup offers the path of least resistance to play a recovery (or just end-market stability)," noted the analyst team.

Polaris Industries ( PII ) also stood out with an Overweight rating and price target of $125.00. "While softer sentiment likely prevents a full valuation recovery NT, we think the combo of planned new products, OK early season anecdotes, and PII’s idio margin opp’ty creates a more visible path to backstopping earnings NT," reads the KeyBanc summart.

Patrick Industries ( PATK ) was also viewed bullishly with an Overweight rating and $80.00 price target assigned. Near-term macro challenges are called real, but KeyBanc thinks PATK offers compelling nea-term value at current levels due to end market diversification, WC tailwinds, automation/efficiency investment, and deflationary tailwinds all acting as buffers.

Stocks that were initiated at Sector Weight by KeyBanc included Garmin ( GRMN ), Peloton Interactive ( PTON ), Winnebago ( WGO ), Thor Industries ( THO ), Yeti Holdings ( YETI ), and Mastercraft Boat ( MCFT ).

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