DA Davidson maintains BUY on Shyft Group with $15 target

On Monday, DA Davidson analyst Michael D. Shlisky reaffirmed a Buy rating and a $15.00 price target on The Shyft Group (NASDAQ: SHYF), following the company’s fourth-quarter results for the year 2024. The analyst expressed continued support for the stock, despite the company’s guidance for 2025 slightly trailing the firm’s expectations. With a market capitalization of $389 million and currently trading at $11.29, InvestingPro analysis suggests the stock is undervalued. Shlisky noted that the anticipated EBITDA growth of 37% should be a positive indicator, especially as the company’s end-markets appear to be recovering.

The Shyft Group’s performance on Friday saw an 8.5% decline in stock value, which came as a surprise to the analyst given the strong growth forecast. According to InvestingPro data, the stock has experienced significant volatility, trading between $9.81 and $17.56 over the past 52 weeks. Shlisky pointed out that the market’s reaction did not seem to align with the robust EBITDA growth projection. With revenue expected to grow 13% in 2025, the company’s recent quarterly results have laid a foundation for what DA Davidson sees as a Growth at a Reasonable Price (GARP) investment opportunity for investors in the upcoming year and into 2026.

In addition to the financial outlook, Shlisky highlighted the potential benefits of The Shyft Group’s impending Aebi Schmidt deal. Both companies are expected to benefit significantly once the transaction is finalized. The company maintains a solid financial position with a current ratio of 1.63, indicating sufficient liquidity to meet short-term obligations. Optimism surrounds the deal, with the analyst noting that both parties seem well-positioned for a successful partnership.

The Shyft Group, known for its specialization in vehicle manufacturing, particularly in the delivery and specialty vehicle industry, has been closely watched by investors for its strategic moves and financial performance. The reaffirmation of the Buy rating by DA Davidson suggests confidence in the company’s ability to capitalize on its market position and the synergies from the upcoming Aebi Schmidt deal.

In summary, while The Shyft Group’s guidance for the year 2025 has not met all of DA Davidson’s initial projections, the growth potential and strategic initiatives like the Aebi Schmidt acquisition provide a basis for the firm’s positive outlook on the stock. The analyst’s reiterated Buy rating and $15.00 price target reflect an anticipation of value growth for The Shyft Group in the near future.

In other recent news, Shyft Group Inc. reported its Q4 2024 earnings, showing a mixed performance. The company achieved an earnings per share (EPS) of $0.15, which met analyst expectations, while revenue fell short at $201.4 million compared to the anticipated $213.24 million. Despite the revenue miss, Shyft Group’s stock price surged by 9.5% in pre-market trading, reflecting investor confidence. The company has also announced the commencement of BlueARC EV truck production and deliveries to FedEx (NYSE:FDX), indicating progress in its electric vehicle initiatives.

Shyft Group’s financial results revealed a GAAP net loss of $3.4 million, or $0.10 per share, but adjusted EBITDA improved significantly to $15.9 million from $2.3 million in the previous year. The company is projecting sales between $870 million and $970 million for 2025, with adjusted EBITDA expected to range from $62 million to $72 million. Additionally, Shyft Group is planning a merger with Abby Schmidt, a move that aims to strengthen its position in the specialty vehicles market.

In terms of operational efficiency, Shyft Group reported improved adjusted EBITDA margins, rising to 7.9% from 1.1% year-over-year. The company anticipates significant sales and EBITDA growth in 2025, driven by its BlueARC EV trucks. Looking ahead, Shyft forecasts adjusted EPS between $0.69 and $0.92 and free cash flow between $25 million and $30 million. The company also noted that achieving breakeven for its BlueARC EV trucks will depend on securing additional orders.

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