Citigroup Turns Bullish On Winnebago, Sees 30% Upside

Citigroup upgraded Winnebago Industries’ stock to Buy from Hold and raised the price target to $63 (30.3% upside potential) from $61. The upgrade followed the manufacturer’s solid 4Q results released on Oct. 21, which were driven by strong demand for its recreational vehicles, and in particular motorhomes.

On Oct. 26, Citigroup analyst Shawn Collins said that WGO reported strong results amid positive outdoor recreation demand trends. However, Collins also believes that “supply chain delays and potential shortages, including RV (recreational vehicles) chassis and other parts into 1H F21” could pressure margins. Nevertheless, the “RV players will manage through these disruptions successfully, just as they have in the past,” said the analyst.

On Oct. 21, Winnebago (WGO) reported that EPS in 4Q grew 45% to $1.45 year-over-year, exceeding analysts’ estimates of $0.90. Revenues surged 39.1% to $737.8 million, beating the Street consensus of $722.9 million. The results were driven by “strong end consumer demand,” the company said.

Winnebago’s CEO Michael Happe said that “We added motorized scale through the acquisition of Newmar and continued to grow our RV market share throughout the year by leveraging strong dealer relationships, exciting new products and record consumer interest.” He added that “As we look ahead to Fiscal 2021, we are encouraged by the ongoing outdoor recreation demand trends we are experiencing.” (See WGO stock analysis on TipRanks).

Currently, the Street has a bullish outlook on the stock with a Strong Buy analyst consensus. The average price target of $63.75 implies upside potential of about 31.9% to current levels. Shares are down by 8.8% year-to-date.

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