On Wednesday, Stifel made an adjustment to the stock price target for Fox Factory Holding (NASDAQ:FOXF), reducing it to $45 from the previous target of $56, while keeping a Hold rating on the stock.
The firm cited ongoing caution ahead of the company's first-quarter earnings report. Industry checks and updates have led to a continued preference for revenue estimates that are below the consensus for both the first quarter and the full year.
The firm anticipates a possible revenue increase in the second half of the year, but also recognizes risks to second-quarter estimates, particularly in two of Fox Factory's higher-margin legacy businesses.
These areas, vehicle upfitting in the Adventure Accessories Group (AAG) segment and bicycles in organic Specialty Sports Group (SSG), have shown persistent weakness, according to industry checks and comments.
Stifel's analysis points out that the expected improvement in revenue trends throughout the year was based on the assumption of decreasing interest rates, which has not yet materialized. As a result, the financial guidance for the fiscal year 2024 could be adjusted or, if it remains unchanged, might suggest a heavier weighting towards the latter half of the year.
The firm is looking for more clarity on the prospects of revenue reacceleration and profit improvement heading into fiscal year 2025. The revised 12-month price target of $45 is set at 9.0 times the average of the estimated EBITDA for fiscal years 2024 and 2025.
InvestingPro Insights
As Fox Factory Holding (NASDAQ:FOXF) navigates through market uncertainties, real-time data from InvestingPro provides a deeper look into the company's current financial health. With a market capitalization of $1.71 billion, FOXF is trading at a P/E ratio of 14.2, reflecting a valuation that is more attractive relative to earnings than the adjusted P/E ratio of 12.57 for the last twelve months as of Q4 2023.
Despite the challenges highlighted by Stifel, FOXF's gross profit margin remains robust at 32.63%, indicating a strong ability to generate earnings relative to its revenue.
InvestingPro Tips suggest that FOXF's stock price has experienced significant volatility and is currently trading near its 52-week low. This could be an indicator of potential undervaluation, especially as analysts predict the company will be profitable this year.
Moreover, FOXF's liquid assets exceed short-term obligations, providing a cushion against financial stress. For investors seeking a more comprehensive analysis, there are an additional 10 InvestingPro Tips available, which can be accessed through the InvestingPro platform. For those interested, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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