Generac cut to Neutral at Citi as positive attributes look largely priced in

[Americans Turn To Home Generators As Large Parts Of Nation Experience Freezing Temperatures]
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Generac (NYSE:GNRC [https://seekingalpha.com/symbol/GNRC]) -2.3% in Tuesday's trading (NYSE:GNRC [https://seekingalpha.com/symbol/GNRC]) as Citi downgraded to Neutral/High Risk from Buy/High Risk with a $219 price target following a strong recovery in the shares during the past two months.

Citi analysts led by Vikram Bagri believe Generac's (GNRC [https://seekingalpha.com/symbol/GNRC]) residential HSB segment continues to "set the bar higher," new products will allow price increases, ecobee is reporting growth, and the telecom business is seeing higher spending, while the high-output generator business should provide strong growth, revenue stability, and operating leverage, but "these positive attributes appear to be largely priced in."

While forecasts are for an above average hurricane season, activity has been largely muted, Citi noted, adding that a major outage event such as a Category 3+ hurricane historically has caused a $50M-$100M boost to guidance.

In residential solar, more safe harbor deals are being announced, such as Enphase's $50M recent TPO deal, but Generac's (GNRC [https://seekingalpha.com/symbol/GNRC]) new PWRmicro line is not expected to start shipping until H2 2025, which Citi said means the company likely will lag competitors seeing safe harbor deals and will launch its micro just as the ~3 GW loan market sees 25D credits expire.

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