on Dec 28, 2022

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  • Janney Montgomery Scott initiates Generac with a “buy” rating.
  • Analyst Sean Milligan dubs Generac stock a favourable risk-reward.
  • GNRC is currently down more than 70% versus the start of 2022.

Generac Holdings Inc (NYSE: GNRC) is trading up on Wednesday after a Janney Montgomery Scott analyst issued a super bullish note in favour of the backup power generators company.

Generac stock has a 70% upside from here

Sean Milligan assumed coverage of the Waukesha-headquartered firm this morning with a “buy” rating and said shares could climb to $160.

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If true, that would mean a whopping 70% return for those who invest in it today. The analyst is bullish primarily because he sees Generac Holdings Inc as somewhat of a monopoly in its niche.

Generac is an established brand with an ~80% market share of the residential standby (HSB) generator market.

Last month, this Fortune 1000 company reported its profit for the fiscal third quarter that came in well ahead of the Street estimates. Versus the start of 2022, Generac stock is now down more than 70%.

Generac stock is a favourable risk-reward

Other than traditional generators, Generac also has a solar battery storage solution on its portfolio. But that footprint in the clean energy industry, as per Milligan, is not reflected in the share price. His note reads:

Generac is trading at a discount to industrial peers with long-term exposure to a structurally growing clean energy market.

Following the sharp sell-off this year, Generac stock is now attractive because of the favourable risk-reward, the analyst added.

Other reasons cited for the bullish view include the company’s history of generating free cash flow and ample liquidity that could induce share buybacks moving forward.