Bank of America analyst Robert Ohmes cut his rating on Weber ( NYSE: WEBR ) to “Underperform” after the company announced an executive transition and withdrew full-year earnings guidance.
In a press release prior to Monday’s market open, the company announced the departure of its CEO Chris Scherzinger effective immediately and the installation of Chief Technology Officer Alan Matula as interim CEO. Alongside the surprising exit of its top executive, the company withdrew its full year sales and earnings guidance after reporting slowing preliminary sales.
In a note to clients assessing these developments, Ohmes downgraded the stock to a Sell-equivalent and slashed his price target from $9 to $5. Adding to this bearish rating was not only the disappointing preliminary sales print, dividend cut, and pulled guidance, but the bank’s forecast of slowing sales in years to come.
“The number of households with grills is the highest on record at 70% of all households as of November 2021 compared to 64% in 2019,” he explained. “We estimate a grill replacement cycle of [about] 7 years, which would represent [about] 13M units replaced every year at current penetration rates.”
By the bank’s calculation, Weber’s ( WEBR ) installed base of 30M grills in the US translates to a 4.3M unit opportunity in the current replacement cycle. Yet, Ohmes believes that could still be over-optimistic given the spate of grill replacements during the pandemic. Per the bank’s estimates, 38% of grill owners replaced their grill from 2019 to 2021.
Shares of the Illinois-based manufacturer fell 14.13% in the waning hours of Monday’s trading, extending a year to date decline nearing 50% for the heavily-shorted stock.
Read more on the details of the pre-market announcement and its implications for the C-Suite, full-year sales forecast, and dividend .
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BofA downgrades Weber to Sell-equivalent after CEO exit, guidance withdrawal