In a report released today, Sherif El-Sabbahy from Bank of America Securities reiterated a Buy rating on Blue Bird (BLBD – Research Report), with a price target of $36.50.
Sherif El-Sabbahy has given a Buy rating to Blue Bird’s stock based on a robust performance and a favorable financial outlook. In the first quarter, Blue Bird’s revenue outperformed expectations by 16%, and its EBITDA surpassed both the consensus and the guidance range. These strong results are indicative of the company’s successful operational revamp and its ability to deliver the highest first-quarter unit volumes in fifteen years. Despite potential headwinds such as supply chain challenges and increased costs in the latter half of the year, Blue Bird has shown confidence by raising its FY24 EBITDA and adjusted free cash flow projections, reflecting a solid financial position and successful cost management strategies.
Further reinforcing the Buy rating, El-Sabbahy highlights Blue Bird’s strategic positioning within the electric vehicle (EV) space, bolstered by the ramping Environmental Protection Agency (EPA) funding for low and zero-emission buses. With a competitive edge evidenced by recent significant order wins, the company is expected to secure a substantial portion of the EPA awards. Additionally, Blue Bird’s proactive price increases are set to help mitigate inflationary pressures. Based on these factors, the report increases both the revenue estimate and the price objective for Blue Bird, projecting a resilient margin and a healthy upside potential without relying on multiple expansions, thus providing a rationale for the Buy rating.
El-Sabbahy covers the Industrials sector, focusing on stocks such as WillScot Mobile Mini Holdings, Herc Holdings, and ESAB Corporation. According to TipRanks, El-Sabbahy has an average return of 30.0% and a 78.57% success rate on recommended stocks.
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Blue Bird (BLBD) Company Description:
Blue Bird Corp. engages in the design and manufacture of school buses. It operates through the Bus and Parts business segments. The Bus segment includes the manufacturing and assembly of school buses to be sold to a variety of customers across the United States, Canada, and in international markets. The Parts segment provides routine maintenance, replacement of parts that are damaged in service, and replacement of parts that suffer from wear and tear. The company was founded by Albert Laurence Luce in 1927 and is headquartered in Macon, GA.
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