Generac downgraded to Hold rating by Argus on supply-chain hurdles
George Frey/Getty Images News
Generac (NYSE:GNRC) on Friday was downgraded to a Hold rating from Buy by analysts at Argus Research. They said the maker of backup generators faces supply-chain issues that will hamper growth for the next few quarters.
“From a technical standpoint, the shares have been in a bearish pattern of lower lows and lower highs since October 2021,” according to the Nov. 25 report. “Compared to a group of peers that serve similar markets (FAST, ECL, WMX, OC), the shares are trading at below-average multiples, which we think is reasonable given the company's near-term growth challenges.”
Looking further ahead, Argus has a favorable view of Generac (GNRC), rating the company as a five-year Buy.
“Over the long term, we think that the company is well positioned to address the impact of climate change and energy market disruption, 5G deployment and increased automation in manufacturing,” the report said.
Generac (GNRC) has faced difficulties with finding enough contractors and electricians to install backup generators in some regions, making it harder to clear dealer inventories. It added 300 independent electrical contractors in North America during Q3 to bring the total to 8,500, but doesn’t plan to have company-owned dealers and installers.
Generac’s (GNRC) stock this year has declined 69%, compared with a 16% drop for the Standard & Poor’s 500 index (SP500).
Seeking Alpha contributor JR Research rates Generac (GNRC) as a Buy on the company’s long-term possibilities for growth. Seeking Alpha contributor Juxtaposed Ideas has a Hold rating on Generac (GNRC) because of concerns about the economy and legal disputes between Generac and solar company Pink Energy, which last month filed for Chapter 7 bankruptcy protection.