Holley stock rating reiterated at Buy by Canaccord Genuity

Investing.com - Canaccord Genuity has reiterated its Buy rating and $6.00 price target on Holley (NYSE:HLLY), citing resilience against tariff-driven price increases implemented in June. Currently trading at $2.97, the stock shows significant upside potential according to InvestingPro data, which indicates the company is currently undervalued.

The firm’s analysis is based on a recent survey of 37 channel partners, including 20 Certified Holley EFI dealers and 17 resellers, which found that dealers, resellers, and enthusiasts remain "relatively unfazed" by the price increases that have been in effect for nearly five months. This resilience is particularly notable given the company’s healthy gross margin of 43.46% and strong liquidity position, with a current ratio of 2.93.

Canaccord Genuity’s research indicates that after two consecutive quarters of organic growth in the first half of the year, Holley’s ability to maintain this growth trajectory is the key near-term driver for potential upside in the stock.

The firm noted that while July sales were flat during a seasonally slow month and macroeconomic signals remain mixed, it believes Holley’s updated and narrowed sales guidance—which implies 0.3% second-half organic growth—is conservative.

Canaccord Genuity’s third-quarter sales estimates for Holley remain approximately 3% ahead of consensus, with the firm acknowledging management has taken "a bit of a conservative view" on unit volumes due to pricing pressures across the economy and employment concerns.

In other recent news, Holley Performance Brands has announced the pricing of a secondary offering of 14 million shares of its common stock at $2.75 per share. This offering is by a selling stockholder controlled by Sentinel Capital Partners, with all proceeds going to the selling stockholder. Additionally, Holley has made significant strides in reducing its debt, paying down an additional $15 million, bringing the total debt reduction to $90 million since September 2023. This move is expected to generate up to $3.7 million in annualized net interest savings.

Furthermore, Holley is expanding its Simpson Motorcycle division into the global motorcycle helmet and safety gear market, targeting regions in the European Union, Asia-Pacific, and Latin America. Canaccord Genuity has reiterated its Buy rating on Holley stock with a $6.00 price target, citing strong consumer engagement observed at the company’s LS Fest East event. The firm highlighted Holley’s strategy to drive consumer engagement at the grassroots level as a positive indicator for future growth. These developments reflect Holley’s ongoing efforts to strengthen its market position and financial health.

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