Generac stock target cut to $180 by Canaccord, retains buy

On Thursday, Canaccord Genuity analysts adjusted the price target for Generac Holdings (NYSE:GNRC) shares to $180 from the previous target of $200, while maintaining a Buy rating on the stock. Currently trading at $114.38, with a P/E ratio of 19.73x, the stock has experienced a significant 32% decline over the past six months. The revision reflects a new valuation based on approximately 17 times the estimated non-GAAP earnings per share (EPS) for the year 2027, which is projected to be $10.45. This valuation is slightly above the median EPS multiple of around 15 times within Generac’s comparative group of companies. According to InvestingPro data, 8 analysts have recently revised their earnings expectations downward for the upcoming period.

The analysts have expressed their continued belief in the slight premium of Generac’s target multiple, citing the company’s dominant position in the home standby generator (HSB) market, where it holds approximately a 70% share. With a market capitalization of $6.76 billion and an overall "GOOD" financial health score from InvestingPro, Generac’s strong market presence is complemented by a diverse range of commercial and industrial products, including a new offering tailored for data centers.

Generac’s clean energy segment was also highlighted as a potential growth driver for the company. Despite starting from a relatively low base, the introduction of new products in the clean energy space could lead to significant advancements for Generac. The company has maintained strong profitability with a gross margin of 39.6% and revenue growth of 8.1% over the last twelve months. The analysts remain confident that these factors justify the slight premium in their target price multiple.

The price target adjustment comes as analysts continually assess the future earnings potential of companies and the appropriate valuation multiples based on industry standards and individual company prospects. Generac’s strong market share and expansion into new product areas appear to underpin the analyst’s positive outlook on the stock, despite the lowered price target.

Generac’s stock price will continue to be influenced by its financial performance, market conditions, and investor perception of its growth prospects, particularly in the clean energy sector. The current Buy rating suggests that Canaccord Genuity analysts believe the stock still holds potential for investors, even with the revised price target.

In other recent news, Generac Holdings reported a strong first quarter for 2025, surpassing earnings expectations with an earnings per share (EPS) of $1.26, compared to the forecasted $1.02. The company also exceeded revenue projections, posting $942 million against an anticipated $923.37 million. Despite this robust performance, Generac has revised its full-year 2025 outlook, now expecting revenue growth between 0-7%, a decrease from the previous 3-7% forecast. The adjusted EBITDA margin forecast has also been narrowed to 17-19% from an earlier range of 18-19%.

Stifel analysts responded to these updates by lowering their price target for Generac stock to $195 from $200, while maintaining a Buy rating. The firm remains optimistic about Generac’s long-term growth potential despite the revised guidance. Generac’s residential product sales saw a notable increase of 15%, contributing significantly to overall revenue growth. However, the company experienced a 5% decline in commercial and industrial product sales, which affected overall growth figures.

Generac is also preparing for potential economic impacts, including a $125 million tariff effect in the second half of 2025, which it plans to offset through price increases of 7-8%. CEO Aaron Jagdfeld emphasized the company’s agility in adapting to market changes and highlighted the long-term growth drivers, such as lower power quality and rising power prices, which continue to support Generac’s growth expectations.

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