Jefferies lowers Generac stock price target to $175 on weak outage trends

Investing.com - Jefferies lowered its price target on Generac Holdings (NYSE:GNRC) to $175 from $200 while maintaining a Hold rating, citing concerns about below-average power outages affecting the company’s home standby generator business. According to InvestingPro data, Generac’s stock, currently trading at $171.33, appears undervalued compared to its Fair Value, despite showing significant volatility in recent months.

The investment firm expects Generac to reduce its home standby generator (HSB) forecast as the company’s current guidance incorporated baseline outages versus the below-average outages observed year-to-date. Jefferies noted that softer outages seen in July and August will likely impact third-quarter results. Despite these challenges, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.0 and operates with moderate debt levels.

Generac faces additional challenges in the fourth quarter with tough comparables following the approximately $200 million benefit from 2024 storms. The company has implemented price increases of 5-7% across its product line, with additional pricing expected on larger units in late fourth quarter.

Jefferies anticipates updates on Generac’s progress in the data center market, with investors focused on the company being added to approved vendor lists. Most of this opportunity is expected to materialize in 2027 and beyond, given typical construction timelines for data centers.

For 2026, Jefferies projects Generac’s data center sales to be closer to the current backlog of approximately $150 million rather than the $500 million in available capacity the company has discussed. With analysts forecasting EPS of $7.70 for FY2025 and the company maintaining a healthy revenue CAGR of 14% over the past five years, investors seeking deeper insights can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks including Generac.

In other recent news, Generac Holdings Inc. reported its second-quarter 2025 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $1.65, compared to the forecasted $1.35. The company’s revenue reached $1.06 billion, exceeding the anticipated $1.03 billion. These results indicate strong performance and have caught the attention of investors. Meanwhile, UBS has maintained its Buy rating and $220 price target on Generac, citing the company’s robust position in both commercial and residential power markets. Stifel also reaffirmed its Buy rating and maintained a $210 price target after discussions with company executives about potential short-term headwinds in the home standby generator business. Canaccord Genuity, however, lowered its price target to $240 from $250, attributing the change to lower outage activity this quarter. Additionally, Generac launched its new PWRmicro, an 820-watt microinverter aimed at enhancing solar energy capture. The microinverter is designed to integrate with Generac’s existing energy products, including PWRcell 2 battery systems and home standby generators.

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