What happened
Closing 3% lower yesterday than where they ended the abbreviated trading session on Friday, shares of Generac Holdings (GNRC 1.26%) started the week on an inauspicious note -- one it's continuing today. Thanks to an analyst's bearish note, investors are unplugging the backup power specialist from their portfolios this morning.
As of 9:55 a.m. ET, shares of Generac are down 2.6%, recovering from their earlier decline of 4.8%.
So what
Advising investors that Generac Holdings faces headwinds from the disruptive nature of bidirectional charging in electric vehicles (EVs), Saree Boroditsky, an analyst at Jefferies, downgraded the stock from hold to underperform and reduced the price target to $85 from $95, according to The Fly. In addition, Boroditsky suggested that Generac faced "material downside risk" in its financials after strong performance in the company's sales of residential and small business generators.
A new technology, bidirectional charging, enables EVs to provide power back to the grid when they are plugged in.
Generac's stock has come under heavy pressure recently. In October, for example, shares fell 35% as a result of the company announcing the bankruptcy of a major customer as well as a 2022 forecast that was revised downward.
Now what
It's unsurprising for stocks to tumble when analysts wax bearish about their prospects. Oftentimes, Main Street investors can take these speculations with a grain of salt, since analysts frequently have shorter time horizons than the long-term holding periods we favor.
In the case of Generac, however, there are a variety of concerns -- not simply the ones that Boroditsky is sharing today. Those with Generac on their radars, therefore, may want to continue watching this growth stock from the sidelines.
