Recent sell-off in Generac stock ‘creates an attractive entry’: Truist

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Updated on Aug 14, 2024

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Generac Holdings recently sold-off after lowering full-year guidance.
Truist analyst Jordan Levy still sees upside in it to $160 per share.
Generac stock is still up 20% versus its year-to-date low in April.

A near 30% post-earnings decline in Generac Holdings Inc (NYSE: GNRC) is an opportunity to buy a quality name at a deep discount, says a Truist analyst.

Generac stock has upside to $160

Jordan Levy upgraded the backup generators company following its recent sell-off to “buy” and said its shares could hit $160 – a 40% upside from here.

He’s bullish on Generac stock for two primary reasons; attractive valuation and a potential for continued recovery in clean energy.

The sell-off creates an attractive entry for investors to gain exposure to a well-established name in home/commercial backup power w/upside potential from a recovering Clean Energy segment.

The New York listed firm noted a 23% year-on-year decline in its quarterly revenue that made it come in shy of earnings estimates in Q2.

Generac could benefit from pent-up demand

Note that Generac Holdings has lowered its guidance for the full year as well. Earlier this week, it warned of an up to 12% annualised decline in sales in fiscal 2023.

Still, the Truist analyst is convinced that pent-up demand could help Wisconsin-headquartered firm beat his growth estimates for 2024. According to Levy:

Given tailwinds surrounding home energy resiliency/consumer energy awareness, we could see HSB cycles compressed driving pent-up demand and could create upside to our 2024 growth forecasts.

Generac stock is also attractive considering continued improvements in terms of free cash flow. The Fortune 100 company is scheduled for an analyst day next month which may also serve as a catalyst for its share price.