e.l.f. Beauty stock plummets 20% as revenue and guidance fall short of expectations
Investing.com - DA Davidson downgraded REV Group (NYSE:REVG) from Buy to Neutral on Friday, setting a price target of $57.00 following the company’s merger announcement with Terex (NYSE:TEX). The downgrade comes as REV Group’s stock has taken a significant hit, dropping 11.5% over the past week, despite posting an impressive 104% return over the last year.
The downgrade comes after REV Group revealed plans for a cash-and-stock merger with Terex, which DA Davidson notes was valued at approximately 11 times multiple at the time of announcement. According to InvestingPro data, REV Group currently trades at a Price/Book ratio of 7.49, with a Fair Value assessment closely aligned with DA Davidson’s new price target.
While the research firm acknowledges the merger allows for a "simple exchange" by adding Terex to the mix, it expressed concern about abandoning what it viewed as REV Group’s "solid growth trajectory" that had shown promise for multiple years ahead with "great visibility." This concern is understandable given REV Group’s strong financial performance, with a 65% price increase over the last six months and solid profitability metrics.
DA Davidson’s previous Buy rating was partially based on its positive assessment of REV Group’s management team, which had been implementing a turnaround strategy but will now be departing following the merger.
The research firm indicated that REV Group’s shares will be closely tied to Terex’s performance in the near term, influencing its decision to adopt a more neutral stance on the stock.
In other recent news, REV Group reported its fiscal third-quarter 2025 earnings, delivering an earnings per share of $0.79, which significantly surpassed the forecasted $0.63. The company’s revenue reached $644.9 million, exceeding expectations and prompting a positive reaction from investors. Additionally, REV Group and Terex Corporation announced a definitive merger agreement to create a diversified specialty equipment manufacturer. Under the terms, REV Group shareholders will receive 0.9809 shares of the combined company and $8.71 in cash for each REV Group share. Terex shareholders will own approximately 58% of the combined entity, while REV Group shareholders will hold about 42%.
DA Davidson reiterated a Buy rating on REV Group, maintaining a positive outlook due to strong RV chassis order growth. Industry data revealed a 224% year-over-year increase in RV chassis orders in August, followed by a 175% rise in September. REV Group also reported increased RV sales at major industry events, with a 20% rise at the Hershey show and a 66% increase in sales for the American Coach brand over 2024 results. These developments highlight a robust period for REV Group, marked by strategic growth and positive market sentiment.
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