Blue Bird stock target cut to $68 at Craig-Hallum, retains Buy

On Thursday, Craig-Hallum analyst Eric Stine adjusted the price target for Blue Bird Corp (NASDAQ:BLBD) to $68.00, down from the previous $71.00, while reaffirming a Buy rating on the company’s shares. According to InvestingPro data, the company maintains strong fundamentals with an impressive return on equity of 106% and revenue growth of 18.92% over the last twelve months. Despite electric vehicles (EVs) comprising only 6% of total sales, Blue Bird achieved a record high EBITDA margin of 15.1% and nearly record quarterly EBITDA.

The company’s financial guidance for fiscal year 2025 remains largely consistent, with an unchanged EBITDA outlook at the midpoint. While the stock has experienced volatility, with a 26.31% decline over the past six months, Blue Bird maintains a strong financial health score of "GREAT" on InvestingPro. The company has adjusted its guidance to account for uncertainties surrounding ongoing Environmental Protection Agency (EPA) funding, lowering the bottom end while raising the upper limit, outlining a feasible approach to reach these targets.

Blue Bird’s positive trajectory is further evidenced by a robust backlog, which includes approximately 4,700 units valued at $760 million. For the fiscal year 2025, the company has secured nearly 1,000 EV units, with 75% of its EV backlog expected to be unaffected by any potential federal funding interruptions. Additionally, Blue Bird has strategies in place to mitigate the impact of any future tariff actions and has an active stock buyback program underway.

Stine’s commentary highlights that while questions about EPA funding persist, Blue Bird’s current valuation metrics are compelling, trading at an EV/EBITDA multiple of 7.04x and a P/E ratio of 11.3x. InvestingPro analysis suggests the stock is currently undervalued, aligning with the analyst’s view. The analyst concludes by reiterating a Buy rating for Blue Bird Corp, signaling confidence in the company’s financial health and market position. Discover more insights and 10 additional ProTips for BLBD with an InvestingPro subscription, including exclusive access to the comprehensive Pro Research Report covering 1,400+ top US stocks.

In other recent news, Blue Bird Corporation has seen significant developments. Needham and BTIG analysts lowered their price targets for Blue Bird to $49 and $45, respectively, while maintaining Buy ratings. This reflects a cautious approach due to uncertainties surrounding federal subsidies for electric vehicles (EVs). Despite this, Blue Bird’s financial performance exceeded expectations, with adjusted earnings per share (EPS) and EBITDA surpassing consensus estimates.

On the leadership front, John Wyskiel was appointed as the new President and CEO of Blue Bird. Wyskiel brings over three decades of experience in the automotive industry, having held senior roles at Magna, Dana Corporation, and Borg Warner.

Furthermore, Blue Bird reported a record fiscal year for 2024, with a 6% increase in bus sales and a 19% rise in sales revenue. The company’s adjusted EBITDA more than doubled from the previous year, with a notable increase in the adjusted EBITDA margin. Electric bus production and deliveries grew by 30%, with EVs making up 8% of total sales.

Craig-Hallum raised the stock’s price target to $71 from $68, highlighting a strong finish to the fiscal year 2024 (FY24). The firm noted the company’s positive trend and momentum are expected to continue into fiscal year 2025 (FY25). These recent developments highlight Blue Bird’s solid financial foundation and strategic federal support, positioning it well for continued growth in the school bus manufacturing industry.

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