BMO cuts Winnebago price target to $60, maintains Outperform

On Friday, BMO Capital Markets adjusted its outlook on Winnebago Industries (NYSE:WGO), reducing the price target to $60 from the previous $70, while still keeping an Outperform rating on the stock. Currently trading at $34.91, near its 52-week low of $33.62, InvestingPro analysis suggests the stock is undervalued, making it an interesting watch for value investors. Tristan Thomas-Martin of BMO Capital provided insights into the decision, noting that Winnebago’s financial results for the second quarter of fiscal year 2025 surpassed expectations. However, the company has revised its guidance downwards in the face of persistent macroeconomic challenges and consumer uncertainty.

Thomas-Martin acknowledged that the reduction in guidance was largely anticipated by the investment community. The analyst pointed out that recreational vehicle (RV) retail demand has not picked up as much as expected in the calendar year 2025. Despite this, industry checks suggest that the RV sector has outperformed other categories within the leisure segment covered by BMO Capital. The company maintains strong financial health with a current ratio of 2.58, indicating solid liquidity to weather market challenges.

Winnebago’s latest quarterly performance indicated resilience amidst a tough economic climate. Thomas-Martin expressed confidence in Winnebago’s ability to navigate the current market conditions, citing the company’s innovative product strategies. According to the analyst, these initiatives are likely to bolster Winnebago’s market share growth moving forward.

The lowered guidance comes at a time when the broader leisure industry is grappling with the impact of economic uncertainty on consumer spending. Winnebago’s adjustment reflects a cautious approach in an unpredictable retail environment.

In summary, BMO Capital sees Winnebago’s recent performance as a positive sign, with the potential for new products to drive future gains. The firm’s maintained Outperform rating suggests that, despite the current headwinds, Winnebago is well-positioned to outperform the market over the long term. With a dividend yield of 3.62% and a 12-year track record of consistent dividend payments, the stock offers both income and growth potential. InvestingPro subscribers can access 13 additional investment tips and a comprehensive Pro Research Report for deeper insights into Winnebago’s market position and future prospects.

In other recent news, Winnebago Industries reported its second-quarter fiscal 2025 earnings, with an earnings per share (EPS) of $0.19, surpassing the forecast of $0.18. The company, however, experienced a slight revenue miss, reporting $620.2 million compared to the expected $621.41 million. This led to a revision of its full-year revenue guidance to $2.8-$3.0 billion. KeyBanc maintained an Overweight rating on Winnebago, with a steady price target of $47, noting the company’s strong inventory position and positive reception to its new Lineage product. Truist Securities also maintained a Buy rating but adjusted the price target to $50 from $58, following Winnebago’s financial results.

Despite challenges such as macroeconomic pressures and uncertain tariff policies, analysts from both firms expressed confidence in Winnebago’s strategic initiatives and market positioning. The company’s adjusted EPS guidance for fiscal year 2025 was revised to $2.75-$3.75, down from the previous $3.10-$4.40 range. Winnebago’s management highlighted their strategic focus on product innovation and operational efficiency, which contributed to market share gains in key segments like Class A and C motorhomes. The company’s shares are trading at a multiple of 7.5 times the projected EBITDA for fiscal year 2025, which Truist Securities considers undervalued, indicating potential for long-term growth.

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