Winnebago stock slumped 18.3 percent in January, according to data from S&P Global Market Intelligence, with the major portion of the losses coming after an analyst downgrade.
This story originally appeared on Fox Business.
The analyst downgraded both Winnebago and peer Thor Industries, suggesting that the RV sector could be losing steam.
Winnebago stock was holding up firm until the last week of January when Northcoast Research downgraded its rating to neutral, raising concerns that retail sales in the industry may slow down and that the dealer inventory is at “unsustainable” levels for 2018.
Winnebago relies heavily on its dealership network in the U.S. and Canada for sales and manufactures motorhomes and towables to order from dealers. So, if end-user demand doesn’t shape up as anticipated, dealers will work through their existing inventory and delay or cancel fresh purchases from Winnebago. Another point worth noting is that two dealer organizations alone accounted for 19.9 percent of Winnebago’s total revenue in fiscal 2017.
Northcoast Research’s apprehensions come after a series of strong quarterly earnings reports from Winnebago through 2017. On Dec. 20, Winnebago reported an 83.5 percent year-over-year jump in revenue for fiscal 2018 first quarter ended Nov. 25, including the contribution from Grand Design.
As of Nov. 25, Winnebago’s motorized and towable backlog value surged 21.1 percent and 59.2 percent, respectively, from the year-ago period.
