On Friday, B.Riley adjusted its outlook on Legacy Housing Corp. (NASDAQ: NASDAQ:LEGH), reducing the price target to $22 from the previous $24, while keeping a Neutral stance on the stock.
The revision follows the company's recent conference call on Saturday, March 18, where it reported fourth-quarter and full-year 2023 results, which did not meet the firm's expectations. The analyst pointed to a significant seasonal impact in the quarter and persistent sluggishness in the manufactured housing sector as the primary reasons for the adjustment.
"Following positive commentary in November during its 3Q23 results call and expectations to increase production based on what seemed to be improving demand, the environment for manufactured homes in LEGH's markets has become less certain," said the analyst.
The company now plans to maintain its current production levels and focus on building a backlog of homes, anticipating future sales opportunities.
To support growth, Legacy Housing is actively recruiting salespeople, senior managers, and teams dedicated to land development and workforce housing projects. These initiatives are part of the company's strategy to capitalize on various growth avenues. Additionally, the firm's loan portfolios have continued to expand, contributing robust interest revenue and enhancing overall profit margins.
InvestingPro Insights
As Legacy Housing Corp. (NASDAQ: LEGH) navigates through a challenging market environment, recent data from InvestingPro provides a deeper look into the company's financial health and stock performance. Despite the headwinds, analysts have identified a silver lining, anticipating sales growth in the current year. This aligns with Legacy Housing's efforts to recruit sales and management teams to drive future sales opportunities.
InvestingPro data indicates a mixed picture with a significant drop in revenue over the last twelve months as of Q4 2023, showing a decrease of 26.41%. Additionally, the company's stock has experienced a notable downturn, with a one-week price total return of -17.19% as of the provided date. However, the company's profitability metrics remain robust, with an adjusted P/E ratio for the last twelve months as of Q4 2023 standing at 9.42, suggesting a potentially undervalued stock in comparison to earnings.
One of the InvestingPro Tips highlights that the stock is currently in oversold territory according to the Relative Strength Index (RSI), which could indicate a potential rebound opportunity for investors who are monitoring the stock's technical indicators. Furthermore, the company's liquid assets exceed its short-term obligations, which is a positive sign for financial stability.
For investors seeking more comprehensive analysis and additional InvestingPro Tips, there are a total of 9 tips available for LEGH at https://www.investing.com/pro/LEGH. To enhance your investment strategy with these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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