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Generac Higher as KeyBanc Likes Valuation, Home Standby Unit

KeyBanc analyst Jeffrey Hammond affirmed a $400 price target on Generac. He likes the valuation and the Home Standby business.
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Generac (GNRC) - Get Free Report shares rose on Tuesday after KeyBanc Capital Markets upgraded the power generation/storage equipment maker to overweight from sector weight.

Analyst Jeffrey Hammond affirmed his $400 price target. He likes the stock’s valuation and the Waukesha, Wis., company's Home Standby business.

The stock recently traded at $345.45, up 4.7%. It has jumped 65% over the past six months.

“We are increasingly confident that GNRC’s core HSB will surprise to the upside in 2021/2022 on capacity additions and robust demand, which is staying stronger for longer,” Hammond said, according to Bloomberg.

Grid-stability issues “are here to stay,” and GNRC has a huge market share, he said.

Low penetration and multiple outage drivers "support stronger for longer," Hammond said, according to The Fly.

Generac's storage business will benefit from lower battery costs and higher attachments rates, he said.

In addition, the stock’s decline from mid-February through mid-May made the valuation more attractive, Hammond said.

On May 4, Founder Jim Cramer waxed bullish for Generac. "I've been behind Generac for a long time. That was a great quarter," he said, referring to the company’s latest earnings report.

On April 29, Generac reported first-quarter earnings that topped estimates, while increasing its 2021 outlook.

The company posted first-quarter adjusted profit of $2.38 a share on a 70% increase in sales to $807 million.

Analysts surveyed by FactSet were expecting the company to report earnings of $1.86 a share on revenue of $730.6 million.

“Growth was broad-based," Chief Executive Aaron Jagdfeld said in a statement.