Stock Story -
What Happened: Shares of residential swimming pool manufacturer Latham (NASDAQ:SWIM) fell 23.9% in the morning session after the company reported fourth-quarter results and provided full-year revenue and EBITDA guidance that fell short of analysts' estimates as it expects more industry softness in 2024, projecting a ~15% decline in new pool installations in its markets. Despite the weakness, management noted it gained market share in 2023, especially with its fiberglass pools (fiberglass products accounted for ~73% of the company's in-ground pool sales in 2023). Adding to the positive, Latham exceeded analysts' operating margin and EPS expectations during the quarter. Zooming out, this was still a decent, albeit mixed, quarter, showing that the company is staying on track.
Following the results, Bank of America (NYSE:BAC) downgraded the stock's rating from Buy to Underperform (Sell) and lowered the price target from $4.5 to $2.6. The new price target represents a potential 13% downside to where shares traded when the downgrade was announced.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Latham? Find out by reading the original article on StockStory.
What is the market telling us: Latham's shares are very volatile and over the last year have had 69 moves greater than 5%. But moves this big are very rare even for Latham and that is indicating to us that this news had a significant impact on the market's perception of the business.
Latham is up 20.4% since the beginning of the year, but at $3 per share it is still trading 34.2% below its 52-week high of $4.56 from July 2023. Investors who bought $1,000 worth of Latham's shares at the IPO in April 2021 would now be looking at an investment worth $110.46.
