Deutsche Bank upgrades this little-known pool stock
Pandemic lockdowns are over, but consumers are still spending on renovations to enjoy more free time at home, Deutsche Bank said, forecasting Pool Corp’s shares could rise nearly 30% from here. The stock rose 4% on Wednesday after analyst Joe Ahlersmeyer upgraded the pool construction company to “buy” from a hold rating and said the stock and earnings guidance should surprise to the upside. “While we are a little early and the stock could be choppy around the 4Q22 print, we expect stocks to ultimately follow fundamentals this year and increased cash flow and buybacks should provide significant additional support for outperformance of shares offer,” he wrote in a note to clients on Tuesday. Despite fears that spending will slow on the horizon, Deutsche Bank believes high-priced remodels will continue as homeowners look to upgrade their homes to enjoy them and sell them at a higher price. Investors have also come to believe that much of Pool’s success hinges on taking advantage of the pandemic stimulus and lockdowns. But according to Ahlersmeyer, these concerns appear misguided. The analyst said a “growing group of investors have begun to recognize that the expansion of the business has been driven by structural forces, including rigid non-commodity prices (~+30%), acquisitions (nearly +20%) and growth in installed base Basis (almost +10%) stock gains (~+25%) and higher spending per pool, mainly from higher value products.” Deutsche Bank increased its pool stock price target to $417 from $350, countering a 28% uptrend At the same time, Ahlersmeyer slashed 2023 EPS estimates by 3% and shared an estimate of $21.49 for 2024. Shares lost 46.6% in 2022 but are already up 13% in the new year. – CNBC’s Michael Bloom contributed to the coverage
https://www.cnbc.com/2023/01/11/deutsche-bank-upgrades-this-little-known-pool-stock.html Deutsche Bank upgrades this little-known pool stock
