RV industry seeing a 'lost year' in 2024 as orders drop, analyst says

By Steve Gelsi

Orders for recreational vehicles drop, but D.A. Davidson analyst sees REV Group and Shyft Group as buys

With chassis orders and production down sharply for recreational vehicles, D.A. Davidson analyst Michael Shlisky said Tuesday that 2024 "is looking more and more like a lost year for the industry."

As higher interest rates jacked up the cost of purchasing RVs and with the market well supplied following a spike in demand during the pandemic, the RV market has cooled considerably this year.

Truck-chassis orders that correspond to Class A and Class C motor homes fell 66% in July as the numbers "continue to challenge the lows set at the start of the COVID-19 pandemic," Shlisky said in a research note citing industry data from ACT Research.

Production fell 51% in July in another poor reading on the RV business.

Despite the weak numbers, Shlisky is reiterating buy ratings on REV Group (REVG), which makes specialty vehicles and RVs, and on chassis maker Shyft Group (SHYF).

REV Group continues to outperform its peers, while Shyft Group, which makes Spartan RV chassis, will have easier comparable sales comparisons in the coming quarter, he said.

REV Group reports third-quarter results on Sept. 4, while Shyft Group provides its next quarterly update on Oct. 31.

Shlisky upgraded Shyft Group to buy from neutral on July 29 and praised its acquisition of Independent Truck Upfitters as a "potential home run" despite the "very low levels" of business in motorhomes and van markets.

On June 6, Shlisky reiterated a buy rating on REV Group and hiked his price target on the stock to $33 from $25 after the company's second-quarter results beat expectations.

"[REV Group] continues to have multiple avenues for earnings growth," he said at the time.

The RV market has often been described as cyclical, with the current period representing a possible bottom.

Also read: Winnebago's stock slides after earnings fall short of estimates

-Steve Gelsi

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08-20-24 0923ET

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