On Monday, Stifel, a financial services firm, upgraded Latham Group Inc. (NASDAQ: SWIM) stock from Hold to Buy and increased the price target to $4.00, up from the previous $3.00. The upgrade reflects a positive outlook on the company's potential to outperform within the pool industry, particularly as the market approaches a more normalized environment.
The firm's analysis suggests that the current share price does not fully account for Latham Group's capacity to benefit from growth in the pool category. The initial fiscal year 2024 (FY24) guidance provided by the company has been perceived as conservative, which Stifel believes offers some room for error. This guidance has set investor expectations at a level that could be easily exceeded, considering the cautious stance taken by the company.
According to Stifel, the FY24 guidance assumes a more conservative category outlook compared to Latham Group's public pool industry peers. It also factors in limited market share gains and an increase in investment.
Looking ahead, Stifel is confident in the company's performance for fiscal year 2025 (FY25), anticipating revenue in line with the broader category outlook and potential upside from factors such as increased fiberglass penetration, market share gains, and channel restock.
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