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B.Riley cuts MarineMax shares target on potential boat demand decline

EditorEmilio Ghigini
Published 07/10/2024, 08:03 AM

On Wednesday, B.Riley adjusted its outlook on MarineMax (NYSE: HZO) shares, a recreational boat and yacht retailer, by reducing its price target to $46.00 from the previous $48.00. Despite the adjustment, the firm has maintained a Buy rating on the stock.

The revision reflects concerns over a potential decline in boat demand. However, the firm believes that the recent developments involving Island Capital Group's proposal to acquire IGY Marinas and the non-retail operations could be beneficial for MarineMax shareholders.

The analyst from B.Riley highlighted the acquisition offer as a positive indicator of external interest in MarineMax's associated operations, which may contribute to unlocking value for the company's shareholders. The new price target of $46.00, down from $48.00, takes into account the current market conditions and the anticipated impact on boat sales.

MarineMax has been navigating through a fluctuating market where demand for luxury items such as boats can be sensitive to economic shifts. The company's performance and stock value are closely tied to consumer confidence and spending power in the recreational sector.

The B.Riley analyst's comments suggest a cautious yet optimistic view of MarineMax's future, considering the potential for external transactions to influence the company's valuation positively. The maintained Buy rating indicates a belief that, despite the challenges, MarineMax still holds potential for growth and value creation.

In other recent news, MarineMax, Inc. has been the subject of significant developments. Island Capital Group LLC has publicly proposed to acquire a significant interest in MarineMax's marina-related services business.

The proposal comes from Andrew L. Farkas, Island Capital's founder, chairman, and CEO, who previously sold Island Global Yachting to MarineMax. Farkas believes his proposal could unlock shareholder value and provide MarineMax with substantial cash during a challenging period for its core business.

On the financial front, MarineMax reported revenues exceeding $582 million in its fiscal 2024 second quarter, primarily due to strong boat sales and marina operations. The company's adjusted net income per share is projected to be between $2.20 and $3.20, and adjusted EBITDA is expected to be between $155 million and $190 million.

In terms of leadership, Rebecca J. White, Ph.D., will assume the role of Chair of the Board on June 30, 2024, succeeding William H. McGill, Jr., who will retire. Additionally, Joseph A. Watters will retire from the Board, reducing the number of directors to ten.

B.Riley maintained a Buy rating on MarineMax and increased the price target to $48.00, up from the previous $38.00. This change came after reports of potential acquisition talks between MarineMax and OneWater Marine (NASDAQ:ONEW).

The analyst at B.Riley expressed skepticism over these reports but noted that the heightened interest could lead to other parties expressing interest or prompt the company's board to consider strategic alternatives.

InvestingPro Insights

In light of B.Riley's recent price target adjustment for MarineMax (NYSE:HZO), investors may find additional context through InvestingPro's real-time data and insights. MarineMax currently operates with a market capitalization of $677.07M and a P/E ratio of 10.79, which adjusts slightly to 10.59 when looking at the last twelve months as of Q2 2024. The company's revenue growth during this period was 5.34%, reflecting a modest upward trajectory in sales.

While B.Riley maintains a Buy rating, it's worth noting that MarineMax is grappling with challenges, as indicated by InvestingPro Tips. The company is dealing with a significant debt burden and a rapid cash burn, while its net income is expected to drop this year. Moreover, the stock price has exhibited considerable volatility, with a 1-month total price return showing a 10.68% decrease as of the latest data.

On the positive side, analysts predict that MarineMax will be profitable this year, supported by the fact that it has been profitable over the last twelve months. However, the company does not pay a dividend, which might be a consideration for income-focused investors. For those interested in deeper analysis, there are additional InvestingPro Tips available, providing a more comprehensive look at MarineMax's financial health and market position. To access these insights, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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