Generac may be a bit too optimistic about its prospects going forward, according to Wells Fargo. Analyst Praneeth Satish downgraded the stock to equal from overweight, noting the power generator maker could fall short of its aggressive 2023 guidance. He reiterated his target price of $135, implying only a 3.9% upside from the stock's closing price of $129.91 on Thursday. Generac is projecting that its revenue will grow more than 30% by the end of the year, which Satish says may be too steep of a hill to climb. "This equates to quarterly EBITDA more than tripling from Q1 to Q4," the analyst wrote on a Friday note. "Ultimately, this seems aggressive to us, as there's limited visibility into installation capacity growth and clean energy challenges." Wells Fargo's base case assumes a more moderate growth rate for the next two years, forecasting revenue to decline 12% in 2023 before growing 11% in 2024. However, Satish noted that if Generac meets its 2023 guidance, shares could rally more than 30%. The company reported a beat on its quarterly per-share earnings on Wednesday. Shares dropped 2% in the premarket Friday. The stock has rallied 29% since the beginning of 2023. —CNBC's Michael Bloom contributed to this report.
