On Friday, KeyBanc made adjustments to its outlook on Malibu Boats (NASDAQ:MBUU), reducing the price target to $38.00 from the previous $50.00, while maintaining an Overweight rating on the stock. The change follows the company's third fiscal quarter of 2024 results, which presented a mixed picture with revenue falling short of expectations but earnings per share surpassing them.
The company also revised its guidance downward, prompting the analyst to modify the price target. Despite the challenges facing the leisure vehicle market and the marine cycle, where retail demand continues to be under pressure, the analyst believes that Malibu Boats' decision to scale back production in fiscal year 2024 and aim to normalize channel inventory by the end of June could present a more favorable comparison in fiscal year 2025.
The analyst from KeyBanc pointed out that the current year's production cutback, along with additional market concerns such as those related to Tommy's, could potentially lay the groundwork for more manageable comparisons in the following fiscal year. This perspective is taken despite the broader cautious stance on the marine cycle.
Malibu Boats' stock is currently trading at approximately 7 times the analyst's lowered earnings per share estimate for fiscal year 2025, which is at the low end of the historical range of 7 to 15 times. The reiteration of the Overweight rating indicates that the analyst continues to see the stock favorably, even though the price target has been adjusted to reflect the near-term challenges and revised earnings estimates.
InvestingPro Insights
As Malibu Boats (NASDAQ:MBUU) navigates through a challenging period, real-time data from InvestingPro provides a deeper understanding of the company's financial health and market performance. With a market capitalization of $658.89 million, the company is trading at a price-to-earnings (P/E) ratio of -12.30, indicating market skepticism about future earnings. However, the adjusted P/E ratio for the last twelve months as of Q3 2024 stands at a more optimistic 7.29, hinting at potential for recovery.
InvestingPro Tips suggest that Malibu Boats holds more cash than debt, offering a degree of financial stability. Additionally, the stock is currently in oversold territory according to the Relative Strength Index (RSI), which could signal a buying opportunity for investors. Despite analysts expecting a sales decline and a drop in net income for the current year, the company's cash flows can sufficiently cover interest payments, and its liquid assets exceed short-term obligations.
Investors may also take note that Malibu Boats is trading near its 52-week low, which, combined with the fact that the stock has taken a significant hit over the last six months, could indicate a potential undervaluation. For those looking to delve further into Malibu Boats' financials and stock performance, InvestingPro offers additional insights. There are 12 more InvestingPro Tips available, which can be accessed by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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