UPDATE: Winnebago's stock has rallied too much to stay bullish, analyst says
By Tomi Kilgore, MarketWatch
Shares have run up nearly 20% over the past 3 months, and closed at a record earlier this week
Shares of recreational vehicle maker Winnebago Industries Inc. tumbled Wednesday, after they were downgraded at Stifel Nicolaus, citing concerns that prices had rallied too much to stay bullish.
Analyst Michael Baudendistel cut his rating to hold, after initiating coverage with a buy three months ago.
The stock (WGO) shed as much 7.2% in the first few minutes after the open, before paring some losses to fall 6.0% in afternoon trade. Despite the selloff, it has still run up 19.4% over the past three months, and closed at a record $46.50 on Monday. In comparison, the S&P 500 index has gained 4.5% over the past three months.
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Baudendistel said industry data continues to exceed expectations, but he worries that the shares no longer reflect the cyclical risk inherent in the RV business model, especially given that industry growth is likely to start slowing some time next year into 2019.
"Our outlook remains favorable for the company...as we believe new products and production efficiency improvements will help drive near-term growth in excess of the industry," Baudendistel wrote in a note to clients. "But with shares trading through our target price, we believe those expectations are more than fully priced into the stock."