Thor Industries appears poised for a resurgence in market share, particularly with its key customer, Camping World, as indicators of recovery become apparent in the recreational vehicle (RV) sector, according to BofA Securities. The brokerage pointed out that Thor's share of Camping World's retail sales experienced a notable decline of 740 basis points in 2024.
Conversely, rival Forest River saw a significant gain, with an increase of 760 basis points in the same period. This loss accounts for approximately 64% of Thor's total retail market share decline last year, illustrating the competitive dynamics at play. As we look ahead to 2025, Thor has reportedly managed to secure more favorable pricing strategies across its towable contract manufacturing lines.
BofA Securities estimates that Thor's inventory at Camping World has grown by about 700 basis points since December, a metric that supports the expectation of higher shipment volumes in the upcoming fiscal second quarter. These developments signal a potential turnaround for the company. BofA also anticipates further share gains from other significant clients of Thor, as CEO Bob Martin plans to recalibrate the company’s focus on the North American market.
Martin expressed optimism about the retail landscape, stating, 'Barring further future macroeconomic headwinds, we expect retail activity to trend positively in the latter half of fiscal 2025, especially in North America, where we predict a recovery in the retail market.' In light of these trends, BofA has upgraded its rating on Thor's stock, changing it from neutral to a buy recommendation.
The price target for the stock has been adjusted upwards to $125 from a previous target of $110. Following the announcement, Thor's stock witnessed a 1.9% increase during afternoon trading on Monday. Looking toward the company's financial performance, Thor is slated to unveil its fiscal second-quarter results on Wednesday.
BofA projects adjusted earnings per share of $0.21, surpassing Wall Street's expectation of $0.12. Additionally, the brokerage has revised its fiscal 2025 adjusted EPS forecast to $5.05, which is notably above the Street's consensus estimate of $4.37. On a broader scale, BofA has highlighted optimistic signs within the recreation vehicle market.
Indicators such as lean inventory levels, a recent uptick in used unit prices, and robust shipment data suggest a favorable market environment. Dealer sentiment appears to be improving ahead of the busiest selling season of the year, reinforcing the brokerage's positive outlook. BofA added, 'We view the RV market as structurally attractive.
Thor is likely to reap benefits from long-term demographic trends, as millennials are expected to increase their RV usage with age, paralleling trends seen in previous generations.'.