The economic health of the RV industry is being viewed more pessimistically in recent months. Stock prospects of big manufacturers and retailer Camping World looked dimmer yesterday (Sept. 3) after Bank of America Merrill Lynch issued a dour assessment of the industry’s prospects after months of decline.
“We lower our RV industry volume on continued sluggishness and the likelihood that demand was inflated over the past 4 years,” reads the BAML sector summary. The firm has lowered its 2020 wholesale shipment forecast to 379K units from 447K units. The retail forecast is clipped to 406K units from 467K units.
It does not think highly of the highly-touted Millennial market. “We believe Millennials are more likely to buy used RVs or even rent RVs rather than owning, given the big-ticket, 100% discretionary nature of the purchase and a greater degree of comfort with the sharing economy,” it warned.
BAML drops its price target on Camping World to $7 from $10 and Thor Industries to $47 from $58. Shares of Camping World are down almost 39% since January, and have fallen around 63% in the past one-year period according to Zacks Investment Research.
Camping World issued a press release yesterday saying that it plans to strategically shift away from locations where it does not have the ability or where it’s not feasible to sell and/or service RVs. Its current plan is to either sell, repurpose, relocate or close approximately 27 to 37 locations, presumably including many of its Gander Outdoors stores, which sell outdoor products but not RVs.
Camping World is currently opening new RV sales locations. It most recently acquired Richards RV Center in Quincy, Mich., and Diamond RV Center in West Hatfield, Mass.
SOURCE: Camping World press release, Zacks and Seeking Alpha.