Analyst Note| David Whiston |
Winnebago unveiled ambitious fiscal-year 2025 targets at its Nov. 15 investor day. We are raising our fair value estimate to $86 from $77 to give some benefit of the doubt to what we consider a high performing management team, however, we are skeptical on full realization of the targets. Fiscal 2025 revenue is targeted at $5.5 billion, while CEO Michael Happe called for fiscal 2023 to be a softening year for the recreational vehicle market and fiscal 2024 a year of stabilization. Based on current Refinitiv fiscal 2024 revenue consensus, Winnebago’s revenue would have to grow nearly 50% in fiscal 2025 to reach $5.5 billion, and we find growth that fast unlikely given Happe said most growth will be organic. Fiscal 2025 gross margin is targeted at 19% (18.7% in fiscal 2022) and adjusted EBITDA margin at 13% (13.1% in fiscal 2022). The stock fell nearly 8% on Nov. 15, possibly from market skepticism on growth or no EBITDA margin expansion from fiscal 2022.