On Wednesday, Canaccord Genuity adjusted its outlook on Traeger Inc. (NYSE:COOK), increasing the price target to $5.00 from the previous $4.00, while reaffirming a Buy rating on the stock. This adjustment follows Traeger's announcement of Q2 results, which displayed a 2% growth in grill sales, outperforming both the company's and analysts' expectations.
Traeger reported quarterly sales that closely matched consensus estimates. However, the company's grill sales exceeded forecasts, with a 2% increase compared to the anticipated 3% decline by Canaccord Genuity and an 8% drop expected by the wider market. The company's gross margin stood at 42.9%, approximately 325 basis points higher than the consensus, leading to significant outperformance in both adjusted EBITDA and adjusted EPS.
In response to the stronger-than-expected quarter, Traeger has revised its full-year 2024 guidance upwards. Initially, the company had projected a high single-digit percentage decline in grill sales, but now expects them to remain flat. This implies an anticipated 10% increase in grill sales for the second half of the year, a substantial improvement from the previous forecast of a 7% decline.
The company's CEO, Jeremy Andrus, has shown confidence in the value of Traeger's stock, as evidenced by his substantial insider purchases. Andrus acquired nearly $2 million worth of stock in less than three months, which Canaccord Genuity views as a strong indication of his belief in the company's undervaluation.
Canaccord Genuity suggests that the introduction of innovative new products and the potential for a replacement cycle in the following year could signal a turnaround for Traeger after several challenging years. Based on these revised estimates and the positive outlook, Canaccord Genuity has reiterated its Buy rating and raised the price target for Traeger Inc.
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