BTIG cuts Blue Bird stock price target to $45, maintains Buy

On Thursday, BTIG analyst Gregory Lewis (JO:LEWJ) revised the price target for Blue Bird Corp (NASDAQ:BLBD) shares to $45.00, down from the previous target of $55.00, while reaffirming a Buy rating on the stock. According to InvestingPro data, analysts’ targets range from $41 to $71, suggesting significant upside potential. The stock appears undervalued based on InvestingPro’s Fair Value analysis, with the company maintaining a "GREAT" overall financial health score. Blue Bird’s financial performance for the first quarter of fiscal year 2025 was revealed, showcasing adjusted earnings per share (EPS) of approximately $0.92, surpassing the consensus estimate of roughly $0.79. The company’s adjusted EBITDA also exceeded expectations at about $46 million, compared to the consensus of around $41.6 million and BTIG’s estimate of $40 million. InvestingPro analysis shows the company’s strong profitability metrics, with a return on equity of 106% and a healthy gross profit margin of 19% over the last twelve months. Want deeper insights? InvestingPro offers 8 additional key tips about BLBD’s financial performance.

The stock remained relatively unchanged in post-market trading following the earnings announcement. The improved profitability was attributed in part to effective cost management, which helped to mitigate the impact of lower average selling prices resulting from changes in customer and product mix. Blue Bird delivered approximately 2.13 thousand buses during the quarter, a sequential decrease of about 13.5% but consistent year-over-year, leading to revenues of roughly $314 million. This figure exceeded management’s forecast of approximately $300 million, with internal combustion engine (ICE) vehicle sales remaining comparatively robust.

Looking ahead, management has kept its full-year 2025 revenue guidance steady at $1.4 billion to $1.5 billion but has broadened its EBITDA forecast to $185 million to $215 million, up from the previous range of $190 million to $210 million. The adjustment is largely due to the timing of electric vehicle (EV) deliveries. Revenue guidance for the upcoming quarter suggests an incremental increase of about $36 million, with expectations to reach around $400 million per quarter by year-end as revenue progressively rises.

In the reported period, EV sales totaled approximately 132 units, accounting for about 6% of total sales, showing a sequential increase of around 57% but a year-over-year decline of about 36%. Blue Bird currently has a backlog of roughly 1,000 EVs, with approximately 75% of these units already having secured funding, which is anticipated to support the annual EV delivery target of around 1,000 units. As of February 2, the company’s backlog stood at approximately $760 million, indicating around 4.7 thousand units. InvestingPro subscribers can access the comprehensive Pro Research Report for BLBD, which provides detailed analysis of the company’s EV transition strategy and growth prospects among 1,400+ top US stocks.

In conclusion, Lewis noted that Blue Bird has consistently exceeded expectations for quarterly profitability. The firm’s outlook on EV delivery volumes remains contingent on the actual levels of government funding received. Despite the reduced price target, BTIG continues to endorse a Buy rating for Blue Bird stock.

In other recent news, Blue Bird Corporation has seen significant developments. The company recently appointed John Wyskiel as its new President and CEO. Wyskiel, with a wealth of experience in the automotive industry, is expected to lead Blue Bird’s strategic initiatives and drive profitable growth.

In terms of financials, Blue Bird has reported a record fiscal year for 2024, with a 19% rise in sales revenue and a doubling of adjusted EBITDA to $183 million. The company’s electric vehicle (EV) sales also saw a substantial increase, with EVs making up 8% of total sales.

Blue Bird’s positive financial trend was recognized by Craig-Hallum, which maintained a Buy rating on the company’s shares. The firm also raised the stock’s price target, following a strong finish to the fiscal year 2024.

These recent developments come as Blue Bird continues to strengthen its position in the market for clean and alternative energy vehicles. The company is benefiting from federal funding, including the EPA’s Clean School Bus Program, which is expected to contribute to supplying up to 4,000 EV buses over the next three years. On the strategic front, Blue Bird was awarded an $80 million investment grant from the Department of Energy for facility expansion.

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