On Monday (NASDAQ:MNDY), Needham adjusted the stock price target for Blue Bird Corp (NASDAQ:BLBD), a company specializing in electric school buses, to $66.00, down from the previous $72.00, while still recommending the stock as a Buy. The revision comes in the wake of recent election-related market volatility and uncertainty regarding the future of electric vehicle (EV) school buses, which the firm refers to as ESBs.
Despite the lowered target, the firm remains optimistic about the North American school bus replacement cycle. Blue Bird's current business, which is heavily reliant on traditional fuel-powered buses, constitutes over 90% of its deliveries.
While acknowledging the increased investor apprehension towards EV-related stocks, Needham sees a sustained demand for ESBs, backed by prior funding and the competitive total cost of ownership (TCO) that ESBs offer, even in the absence of subsidies.
The new stock price target of $66 is based on a 10-times multiple of the firm's forecasted FY26 adjusted EBITDA, a decrease from the previous 12.5-times multiple of FY25 adjusted EBITDA. Needham's stance reflects a belief in the stock's attractive value and a favorable risk/reward profile.
They note that Blue Bird is trading at approximately 7 times the consensus FY25 adjusted EBITDA, indicating a minimal downside risk to estimates and an anticipated mid-teens earnings growth according to their model.
In other recent news, Blue Bird Corporation has been making significant strides in the school bus industry. The company recently announced record net sales revenue of $1.35 billion, a 19% increase from the previous fiscal year. Blue Bird also marked a 6% increase in bus sales, selling 9,000 units for the year, and a 29% increase in electric vehicle sales, selling 704 buses. The firm's backlog stands at over 4,800 units, estimated to be worth around $735 million in revenue.
Blue Bird has also appointed automotive expert Edward T. Hightower to its Board of Directors. Hightower's extensive experience in the electric vehicle and automotive sectors is expected to contribute to the company's growth strategies.
However, Roth/MKM recently downgraded Blue Bird's stock from Buy to Neutral due to concerns over delays in the Environmental Protection Agency's funding distribution process and leadership changes at Blue Bird. Despite these challenges, BTIG maintains a positive outlook for Blue Bird's shares.
In related developments, Amentum announced its future board of directors following the impending merger with Jacobs™ Critical Mission Solutions and Cyber and Intelligence businesses. These recent developments highlight the dynamic landscape in which Blue Bird operates.
InvestingPro Insights
Blue Bird Corp's (NASDAQ:BLBD) financial performance aligns with Needham's optimistic outlook. According to InvestingPro data, the company's revenue grew by 19.53% over the last twelve months, reaching $1.3 billion. This growth is complemented by a strong operating income margin of 10.97%, indicating efficient operations.
InvestingPro Tips highlight that Blue Bird has been profitable over the last twelve months and is expected to grow its net income this year. This supports Needham's view on the company's earnings growth potential. The stock's high return over the last year, with a 130.91% price total return, reflects investor confidence in Blue Bird's business model and market position.
While the company operates with a moderate level of debt, its Price / Book multiple is high at 9.79, suggesting investors are willing to pay a premium for Blue Bird's future growth prospects. This aligns with Needham's assessment of the stock's attractive value proposition.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights on Blue Bird Corp. There are 10 more InvestingPro Tips available, providing a deeper understanding of the company's financial health and market position.
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