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On Tuesday, Canaccord Genuity sustained its positive outlook on Holley (NYSE:HLLY) shares, maintaining a Buy rating with a steady price target of $6.00. Currently trading at $2.65, the stock has seen a challenging period with a -37.2% return over the past year. According to InvestingPro data, analyst targets range from $3 to $6, with the stock currently trading near its 52-week low of $2.29. The firm’s analysts highlighted Holley’s management announcement from November, which set expectations for a return to organic growth in Q1 2025. This forecast is based on easier comparisons from previous quarters and the anticipated impact of internal initiatives. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.93, indicating sufficient liquidity to meet short-term obligations.
The analysts pointed out the inherent challenges in predicting turnarounds and timing market bottoms, noting the difficulty in forecasting such events. In preparation for Holley’s Q4 2024 results and 2025 guidance, set to be released on March 11, Canaccord Genuity conducted a survey of 65 channel partners. This group included 40 Certified Holley EFI dealers and 25 resellers, aiming to gauge their perspective on Holley’s business turnaround, current trends, consumer demand, and the reception of new Holley products.
During the survey, vehicles such as a 1970 Ford (NYSE:F) Torino Cobra, a 2005 Jeep Wrangler, and a 2015 Toyota (NYSE:TM) Tacoma were referenced to contextualize discussions where relevant. Although the majority of dealers and resellers refrained from making definitive predictions for Q1, the analysts at Canaccord Genuity remain optimistic. The company’s fundamentals show promise, with a healthy gross profit margin of 38% and strong free cash flow yield, as revealed in the latest InvestingPro Research Report, available along with 8 additional key insights for subscribers. Their confidence is buoyed by the company’s direct-to-consumer (DTC) growth and the strong consumer interest in the automotive category.
Holley’s recently launched off-road packages, introduced last month, have also received positive initial feedback from dealers. Based on these findings, Canaccord Genuity has slightly adjusted its estimates to reflect stronger growth in the second half of the year. The firm reaffirms its Buy rating and $6 price target for Holley stock, indicating an optimistic outlook for the company’s financial performance. With an Altman Z-Score of 3.5 suggesting financial stability, and a price-to-book ratio of 0.69, the company shows potential for value investors.
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