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On Tuesday, Canaccord Genuity adjusted its outlook on Traeger Inc. (NYSE:COOK), reducing the price target to $3.00 from the previous $5.00, while still recommending the stock as a Buy. According to InvestingPro analysis, Traeger appears fairly valued at current levels, with analyst targets ranging from $2.00 to $4.00. The firm’s decision comes in light of recent developments where Traeger, a prominent grill manufacturer, implemented price hikes across various models. Notable increases include the Pro 22 model, up by 10%, the Pro 34, up by 4%, the three new Woodridge grills with hikes between 13% to 15%, and the new Flatrock 2 Zone Griddle, which saw a 14% price increase.
These pricing adjustments by Traeger are seen as a response to the ongoing tariffs affecting goods sourced from China, which for Traeger, constitute around 80% of their grills. The tariffs remain at a significant 145%, continuing to exert financial pressure on the company. InvestingPro data shows the company maintains a healthy current ratio of 1.99, indicating sufficient liquid assets to meet short-term obligations despite these challenges.
Canaccord Genuity’s report precedes Traeger’s Q1 earnings release, scheduled for Thursday. The analysts at Canaccord have revised their estimates downward, expressing skepticism that the price increases will sufficiently counterbalance the hefty tariffs imposed on Chinese imports. InvestingPro reveals that four analysts have recently revised their earnings estimates downward, though the company is still expected to return to profitability this year. With a gross profit margin of 42.29% and revenue of $604.07 million in the last twelve months, investors can access deeper insights through InvestingPro’s comprehensive research reports.
Despite the challenges, Traeger’s management previously indicated optimism in March, projecting that the grill market could experience a flat to slight increase in growth of 1% to 2% in 2025, following three consecutive years of decline. Nonetheless, Canaccord Genuity anticipates that the higher prices may lead to reduced sales volumes, prompting the firm to reiterate its Buy rating but with a lowered price target.
In other recent news, Traeger’s financial outlook has been revised to negative by Moody’s, with the company’s Caa1 Corporate Family Rating affirmed. This adjustment is due to concerns about reduced consumer spending and potential declines in profitability, exacerbated by exposure to tariffs and economic uncertainties. Traeger’s annual revenue is around $604 million, with significant debt levels impacting its financial leverage. Meanwhile, Traeger has updated the compensation structure for CEO Jeremy Andrus, setting his annual base salary at $750,000 and aligning bonuses with company performance. Analysts from Telsey Advisory Group maintained a Market Perform rating on Traeger with a price target of $2.50, citing product innovations but expressing caution about economic headwinds and tariffs. Canaccord Genuity retained a Buy rating but lowered the price target to $5, following better-than-expected sales in the grill segment and consumables. Jefferies also adjusted Traeger’s price target to $2.25, maintaining a Hold rating, while acknowledging strong grill sales and a new distribution deal with Walmart (NYSE:WMT). These developments reflect a complex mix of challenges and strategic efforts as Traeger navigates market conditions.
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