A more than 30% decline in Generac Holdings Inc. (NYSE: GNRC) since late January is an opportunity to load up on a quality name at a deep discount, says Citi analyst Vikram Bagri.
Bagri raised his rating on the power generator company this morning to “buy”.
His $138 price target indicates potential for about a 25% upside from current levels.
The investment firm is bullish on GNRC shares primarily because it has a history of successfully managing tariffs.
Why is Citi bullish on Generac stock?
Citi recommends loading up on Generac shares because it has experience navigating recessions that many believe are coming in the back half of 2025.
The New York-listed firm was successful in managing tariffs during Trump’s first tenure, the investment firm’s analyst added in his research note on Thursday.
Vikram Bagri remains positive on GNRC stock also because the company has a track record of “demonstrating strong pricing power in the past,” which he’s convinced will help protect its margins from macro uncertainty this year.
Additionally, the investment firm remains positive on Generac stock as it’s much more domestically exposed.
Citi expects GNRC to continue to benefit from blackouts and event-driven sales as well.
GNRC topped Street estimates in its fiscal Q4
Note that Generac was successful in expanding its profit margins despite higher tariffs under Trump 1.0.
Citi analyst Vikram Bagri drives optimism in GNRC shares from the strength of its financials as well.
In February, Generac reported its quarterly results that topped Street estimates.
At the time, Aaron Jagdfeld, the company’s chief executive, told investors:
Our Q4 results highlight our ability to rapidly increase production and execute on the strong demand for home standby and portable generators resulting from elevated outage activity in H2.
That said, Generac stock does not pay a dividend at writing, which makes it unsuitable for those interested in setting up a new source of passive income ahead of a potential recession.
Should you invest in Generac in 2025?
Generac earned $2.80 on a per-share basis and brought in $1.23 billion in sales in its fiscal fourth quarter.
Analysts, in comparison, were at $2.50 a share and $1.22 billion, respectively.
Shares of the backup power generation products manufacturer remain worth owning also because its management issued upbeat guidance for the full year in February.
GNRC sees its revenue increasing by up to 7.0% in 2025 on an adjusted EBITDA margin of about 18% to 19%.
Additionally, the Fortune 1000 firm expects its “free cash flow conversion from adjusted net income to be between 80% to 90%” as per its press release.
Note that Wall Street at large is bullish on Generac shares at writing.
Consensus rating on GNRC currently sits at “overweight” with the mean target of $167, indicating potential upside of more than 45% from here.
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