Generac Holdings ( NYSE: GNRC ) on Thursday was upgraded to Strong Buy from a Buy by analysts at CFRA Research, which said demand for power generators is positive for the stock.
“We maintain a positive demand outlook for GNRC's distributed energy optimization and control software as infrastructure projects ramp up,” Jonathan Sakraida, analyst at CFRA, said in a report. “Increasingly severe and volatile weather could provide further upside to revenue growth in both commercial and residential markets.”
Generac is trading at a forward price-to-earnings multiple of 12.9 times, which is “significantly” less than the five-year average of 22.1 times, leaving room for the stock to appreciate, according to CFRA’s analysis. The researcher maintained its EPS estimates and 12-month price target of $300 a share for Generac.
Generac has declined 50% this year, compared with a 22% drop for the S&P 500 Stock Index ( SP500 ).
The company's revenue grew 40% from a year earlier in the second quarter to to $1.2 billion, beating estimates by $30 million. Its non-GAAP EPS of $2.99 beat estimates by $0.36.
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Generac upgraded to Strong Buy by CFRA on generator demand