Buy Rating Affirmed for REV Group Amid Strategic Growth and Margin Improvement Prospects

Robert W. Baird analyst Mircea Dobre maintained a Buy rating on REV Group (REVG – Research Report) today and set a price target of $28.00.

Mircea Dobre has given his Buy rating due to a combination of factors impacting REV Group’s future prospects. His confidence is bolstered by the company’s clear path to operational and margin improvements, with the expectation of earnings per share potentially doubling by fiscal year 2025. The recent sale of the Collins bus segment indicates strategic portfolio adjustments that could further enhance shareholder value. Dobre views REV Group as a strong contender in the small-cap market, with various mechanisms at its disposal to independently generate shareholder returns, irrespective of larger economic cycles.

The report suggests that investor interest in REV Group is high, focusing on the company’s ability to expand margins, manage price and cost dynamics, and increase production efficiency, particularly in its Fire and Ambulance segments. Under new leadership, the company has seen supply chain advancements and improvements in labor quality, which contribute to the optimistic outlook. Notably, the Specialty Vehicles segment is expected to achieve significant EBITDA margins, with prices in the Fire segment having risen substantially. Additionally, the potential for further divestitures of non-core assets hints at the possibility of unlocking additional value for investors, with the management open to strategic sales if favorable opportunities arise.

Based on the recent corporate insider activity of 14 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of REVG in relation to earlier this year.

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REV Group (REVG) Company Description:

REV Group, Inc. is a holding company. The firm engages in the manufacture, distribution, and design of specialty vehicles and related aftermarket parts and services. It operates through the following segments: Fire and Emergency, Commercial, Recreation, and Corporate and Other. The Fire and Emergency segment offers fire apparatus, and ambulance products. The Commercial segment involves in transit and shuttle buses, type A school buses, mobility vans, sweepers, and terminal trucks. The Recreation segment covers motorized recreational vehicle and application trailers. The Corporate and Other segment includes corporate office expenses, stock-based compensation, results of insignificant operations, intersegment eliminations, income and expenses. The company was founded in August 2010 and is headquartered in Milwaukee, WI.