Traeger Shares Gain 18% Following Q1 Results

Traeger, Inc. (NYSE:COOK) shares surged more than 18% yesterday after the company reported its Q1 results, with EPS of $0.04 coming in better than the Street estimate of $0.02. Revenue was $153.2 million, in line with the Street expectations.

The company's start to 2023 went largely as expected with the business impacted by retailer inventory rightsizing, which will continue into Q2. Management's assumptions for the balance of the year remain intact and led to the full-year guidance being reiterated.

The company provided its outlook for the fiscal 2023 year, expecting revenue to be in the range of $560-$590 million, compared to the Street estimate of $578.6 million.

RBC Capital analyst provided their outlook on Traeger, Inc. (NYSE:COOK) ahead of the company’s upcoming Q4 earnings announcement tomorrow after the market close, noting they still expect fundamental pressure.

The analyst expects Q4 net sales of $120.7 million (vs. Street’s $118.5 million) and EBITDA of -$5.1 million (vs. Street’s -$2.6 million). According to the analysts, the economic environment continues to be difficult for discretionary items, which will continue to impact the company’s sell-in (as retailers destock) and sell-through (as demand remains moderate).

While these pressures are expected to last through H1/23 and delay margin recovery, the outlook for H2/23 is slightly better given that the company will lap retailer destocking efforts and benefit from easing input costs.

Overall, the analysts remain on the sidelines until there is greater clarity regarding retail inventory levels and macro factors impacting the grilling category.

RBC Capital analysts downgraded Traeger, Inc. (NYSE:COOK) to Sector Perform from Outperform and lowered its price target to $3 from $4. As a result, shares closed more than 7% lower on Tuesday.

Although the analysts are still optimistic about Traeger's potential in the outdoor cooking industry due to its technology, innovation, and customer loyalty, they believe that in the short-term, macroeconomic factors will likely decrease the brand's household penetration and cause problems with inventory management, which may affect its revenue and delay the margin recovery.

The analysts lowered their fiscal 2023 net sales outlook to $661 million from $667 million and adjusted EBITDA to $45 million. The analysts are now modeling greater topline pressure in the first half of the year and lower margins as it will take time to work through higher-cost inventory.

RBC Capital analysts provided their outlook on Traeger, Inc. (NYSE:COOK) ahead of the company’s upcoming Q2 earnings release.

The analysts expect Q2 net sales of $229 million (vs. Street’s $221 million) and adjusted EBITDA of $23 million (vs. Street’s $18 million) and have a negative bias for numbers in the quarter and year.

While the analysts believe the Traeger brand is healthy within the broader outdoor cooking space, they think the combination of macro pressure, consumer mobility, and the reprioritization of discretionary dollars likely weigh on near-term category trends.

While the company’s shares have significantly underperformed over the past 3 months, the analysts remain cautious with consumers under pressure, the slowing of home-based discretionary items, and the company’s postponing of the Mexico manufacturing facility.