Blue Bird initiated with a Buy at Needham

Needham analyst Chris Pierce initiated coverage of Blue Bird with a Buy rating and $44 price target. The analyst is bullish on the cyclical tailwind driving growth in Blue Bird’s legacy school bus business following multiple years of industry underinvestment, combined with the transition to higher-priced electric vehicle school buses. Industry channel checks with school bus distributors and the company’s results from the past two quarters are “thesis-affirming,” leading Needham to anticipate multiple years of 10% growth and margin expansion for Blue Bird, the analyst tells investors in a research note. The firm sees a high likelihood of multiple expansion with the stock trading at a “compressed valuation as consensus estimates have moved higher on improved prospects and execution.”