B. Riley initiated coverage on Malibu Boats with a buy rating and a price target of $22 a share.
Shares of Malibu Boats closed at $14.87 on Wednesday.
B. Riley told Trade Only Today before Malibu went public that the company was positioned to do well.
“There’s a lot of headroom to grow before we get anywhere near pre-recession levels in most leisure product categories,” B. Riley analyst Jimmy Baker said in early 2014. “And within the overall consumer space, leisure companies have generally been seeing strong relative growth in recent years. Job growth out of the recession has been sluggish, but it’s still a low-interest-rate environment, coupled with rising asset values. Home prices are recovering and the stock market is at an all-time high.”
“Malibu’s performance out of the recession is impressive, as it generated a 19 percent adjusted EBITDA (earnings before interest, tax, depreciation and amortization) margin in its most recent fiscal year,” Baker said, adding that by comparison the Brunswick Boat Group is generating a margin of about 2 percent and Marine Products Corp. — the builder of Chaparral and Robalo boats — is generating about 6 percent.
