On Monday, Citi updated its stance on Generac Holdings (NYSE:GNRC), a leading manufacturer of power generation equipment and other engine-powered products. The firm raised its price target on the stock to $128 from $124, while maintaining a Neutral rating. The adjustment comes as Citi revises its estimates for Generac ahead of the company's fourth-quarter earnings report.
The analyst at Citi noted that residential sales for Generac are trending as expected, but there are indications of potential softness in the first quarter of 2024. Concerning the commercial and industrial (C&I) segment, the analyst anticipates risks that might lead to performance below the market expectations for the year 2024. Despite these risks, the expected weaker revenues from the lower-margin telecom and rental businesses within the C&I sector could have a beneficial impact on Generac's overall gross margins.
Citi has slightly adjusted its revenue and earnings per share (EPS) forecasts for Generac in 2024, positioning them just below the consensus. This conservative estimation reflects the anticipation of challenges in specific business segments, while also recognizing the potential for improved profitability due to changes in the company's revenue mix.
Investors and market watchers will be looking to Generac's upcoming earnings release to gauge the company's performance and to see how Citi's projections compare with actual results. The updated price target suggests a cautious optimism, acknowledging the company's margin dynamics amidst a complex market environment.
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