It's time to sell Generac amid greater macro challenges this year, according to Truist. Analyst Jordan Levy downgraded shares to hold from buy, saying higher interest rates and inflation hurt the outlook for the power generator maker. "As GNRC looks to return its HSB [home standby generators] & clean energy segments to strong growth in 2H:23, we see high interest rates coupled with higher product prices prolonging a recovery and posing a meaningful risk to the company's 2023 financials," Levy wrote in a Monday note. "Adjusting our ests to reflect a slower recovery in HSB & clean energy sales, we now forecast FY23 revs/EBITDA ~3%/~9% below the Street respectively," Levy added. Generac shares are higher this year, up 25% in 2023, outperforming the S & P 500's gain. However, the analyst expects that shares could fall from here. Levy lowered his price target to $145 from $160, which implies shares have about 14% upside from Friday's closing price of $126.77. Shares fell 3% in Tuesday premarket trading. "GNRC's internal challenges, both related to its core home standby generator (HSB) business & emerging Clean Energy products business have been discussed by mgmt at length over the last several quarters, and we believe are well understood by the Street," Levy wrote. "While we see a road to recovery for both HSB & clean energy, we believe that near-term macro & market headwinds present heightened downside risk to a 2H:23 return-to-growth & could lengthen the recovery period," Levy added. The downgrade comes on the heels of a similar decision from another Wall Street firm. On Friday, Wells Fargo downgraded the stock to equal from overweight , saying Generac could fall short of its 2023 guidance. —CNBC's Michael Bloom contributed to this report.
