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Winnebago Stock Revs Up on BMO Price Target Boost

Winnebago 'can grow sales and earnings faster than the competition', BMO analysts say.

Winnebago  (WGO) - Get Winnebago Industries, Inc. Report was driving in the fast lane Friday after analysts at BMO Capital Markets boosted their price target for the recreational vehicle maker to $100 from $90.

Shares of the Forest City, Iowa company finished up 7.7% to $78.

Analyst Gerrick Johnson, who has an outperform rating on the stock, said in a research note that Winnebago "is well positioned to benefit from ongoing strong RV retail demand."

Johnson cited the company's record sales at the recent recreational vehicle show in Hershey, Pennsylvania and the average selling prices reported by rival recreational vehicle maker Thor Industries  (THO) - Get Thor Industries, Inc. Report, which beat Wall Street's fourth-quarter earnings expectations earlier this week.

Johnson raised his price target on Thor Industries to $166 from $160 on Wednesday while keeping an outperform rating on the shares. Several other analysts raised their price targets for Thor after the earnings beat.

"While we were aware RV manufacturers have increased price, we thought these increases might take a bit longer to flow through results," he said. "However, competitor THO posted very strong FY4Q21 results with the main driver being significant price increases which more than offset cost inflation and resulted in much better-than-expected topline and margin performance."

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Johnson said he was raising his fourth-quarter, as well as his full-year 2022 and 2023 estimates for Winnebago to to reflect this new pricing environment.

"We believe Winnebago can grow sales and earnings faster than the competition owing to operational improvement, continued market share gains from Grand Design and Barletta, enhanced product offering, and the trade-up cycle from first-time buyers," he said.

Winnebago, which is scheduled to report earnings on October 20, announced in July it would buy Barletta Pontoon Boats for $255 million.

Demand for recreational vehicles surged during the height of the coronavirus pandemic as consumers looked for ways to travel without flying on airplanes or boarding cruise ships.

Sales have continued to climb as the RV Industry Association’s August 2021 survey of manufacturers found that total recreational vehicle shipments ended the month with 52,819 units, up nearly 34% from a year ago.

The association said that recreational vehicle wholesale shipments are projected to reach an all-time high in 2021 then continue to trend upward through 2022.