On Wednesday, Canaccord Genuity (TSX:CF) adjusted its outlook on Solo Brands (NYSE:DTC), a company specializing in innovative outdoor products, by reducing the price target from the previous $6.00 to $5.00. Despite this change, the firm maintained a Buy rating on the company's stock.
This decision comes after Solo Brands preannounced disappointing fourth-quarter results earlier this year, which led to a significant drop in the company's stock performance. Since the preannouncement in January, shares of Solo Brands have fallen by 58%, a stark contrast to the Russell 2000 index, which has seen a 6% increase.
The lack of updates from Solo Brands over the past two months has not been beneficial to the company's stock. However, Canaccord Genuity anticipates that the new management team will set a conservative yet achievable guidance for the company when the fourth-quarter results are officially reported on Thursday morning before the market opens. The current market consensus expects a modest increase in 2024 sales by 2% and a slight decrease in adjusted EBITDA by 1%.
Canaccord's stance is that the market's expectations are not overly ambitious, suggesting that the potential risk-reward scenario for investors is favorable. The firm expresses continued confidence in the Solo Stove brand, which currently has a household penetration of just 3%.
The analysts are also optimistic about the company's future under the leadership of CEO Christopher Metz and CFO Laura Coffey. The new management is expected to pursue growth in the wholesale channel, which is considered crucial for enhancing brand recognition.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.