Holley, Inc. (NYSE:HLLY), known for its design, marketing, and manufacture of performance automotive aftermarket products for car and truck enthusiasts, has come roaring into the limelight, thanks to Wall Street analysts’ ratings over the past three months.
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Over the past three months, Holley has featured twice in the TipRanks’ “Best Stocks to Buy Now, According to Top Analysts” reports (on December 21, 2023, and again on February 13, 2024), as analysts reaffirmed their bullish opinions on the stock. HLLY stock has rallied by an impressive 108% in the past year, and analysts expect further upside potential in the months ahead.
What’s Driving Holley Stock?
Like many domestic manufacturing companies, COVID wasn’t particularly kind to Holley. The company manufactures 70 automotive brands across 30 product categories and distributes them via multiple channels. During the pandemic, company leadership focused heavily on the direct-to-consumer (DTC) market but came under fire for lackluster results. A change was needed.
Matthew Stevenson joined the company as the new president and CEO in June 2023. His impressive 25-year career in leadership roles transforming companies such as Daimler, Bridgestone, and Terminix bode well for his capacity to drive the much-needed growth and transformation at Holley.
So far, it appears the new leadership team has been delivering.
Analysts have cited a recent reorganization of the company into seven distinct consumer verticals as a catalyst to accelerate growth. The reorganization efforts, coupled with newly implemented cost-cutting measures, have helped the company post improvements in gross margin, adjusted EBITDA, and free cash flow generation.
Furthermore, enthusiasm for new product launches, such as the Sniper 2.0 electronic fuel injection system, is anticipated to drive a long-term boost in organic growth. Meanwhile, improved sourcing for product manufacture suggests further improvement in gross margin.
“We believe patient investors are rewarded over time with the execution of the new strategic plan,” said Benchmark Co. analyst John Lawrence in a research note earlier this week. Lawrence expects to see the benefits of the company’s strategic efforts in the second half of the year. He reiterated a Buy rating on HLLY stock with a price target of $12.
What is the Target Price for Holley?
Overall, Holley stock scores a Strong Buy consensus rating based on four unanimous Buys. The average 12-month price target for HLLY stock is $8.75, implying 71.57% upside potential from current levels.
Bottom Line: Where the Rubber Meets the Road
A leadership change in 2023 sparked hopes for a turnaround at Holley, and thus far, the new management team has delivered. Impressive strides have been made in improving margins and cash flow, facilitating debt repayment, and reducing leverage. Holley is expected to continue to benefit from recent strategic and organizational changes, and analysts project positive trends. The consensus forecast suggests the stock price will reflect those results in the next 12 months.
