Generac's stock offers 'attractive entry point' to clean energy future, says one analyst

By James Rogers

Generator Generac's third-quarter results blew past analysts' estimates this week

Generac Holdings Inc.'s stock has been attracting plenty of positive analyst attention following the generator maker's third-quarter results, which blew past profit and revenue estimates Wednesday.

"We believe the current price will prove to be an attractive entry point," wrote William Blair analyst Brian Drab, in a note released Wednesday. "We continue to view Generac as an overall high-quality company with exposure to several attractive themes, including grid deterioration, home security, climate change, distributed power generation, and clean energy." William Blair maintained its outperform rating for Generac (GNRC).

Following its third-quarter results, Generac's stock ended Wednesday's session up 14.4%, marking its largest daily percentage increase since Nov. 10, 2022, when it gained 13.3%, according to Dow Jones Market Data.

Related: Generac's stock on pace for its largest one-day gain in nearly a year as profit and revenue overpower analyst estimates

Of 27 analysts surveyed by FactSet, 13 had an overweight or buy rating, 12 had a hold rating and two had an underweight or sell rating. The consensus price target was $135.98, 41.5% above Wednesday's close of $96.13.

Generac's stock has fallen 0.7% in 2023, compared with the S&P 500 index's SPX gain of 11.7%. The company's shares were up 5.4% Thursday.

Stifel upgraded Generac to buy from hold and raised its price target to $135 from $130 Wednesday, citing favorable risk/reward in the company's shares. Positives include the company's valuation and solid underlying growth in Generac's home standby generator (HSB) business, supported by rising grid instability, according to Stifel analyst Stephen Gengaro. "After being on standby since assuming coverage about a year ago, we believe the risk/reward in the shares is favorable," he wrote.

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TD Cowen analyst Jeffrey Osborne highlighted Generac's strong overall demand in a note released Wednesday. "Overall, we view Generac's 3Q23 print as strong given the circumstances, as it seems our initial thesis of Generac a quality industrial company with solar-related upside can now be resurrected with channel inventory headwinds likely in the rear-view," he wrote. TD Cowen maintained its outperform rating and $165 price for Generac.

Steve Gelsi and Philip van Doorn contributed.

-James Rogers

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11-02-23 1024ET

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