Camping World Surges 5% On 2021 Outlook, New Goals

Shares of recreational vehicle or RV maker Camping World jumped 4.8% on Monday following the company’s announcement of its 2021 outlook and new long-term goals. The stock is now rising a further 3% in Tuesday’s pre-market trading.

Ahead of its Investor Presentation conference call scheduled today, Camping World Holdings (CWH) revealed its long-term goals, initiatives and outlook for 2021. Notably, the company expects to grow adjusted EBITDA in the mid-single digits over the next 5 years, with a goal of generating over $500 million in adjusted EBITDA in 2021, compared to a projected EBITDA of $460 million to $490 million in 2020.

It is targeting a minimum adjusted EBITDA margin of 7.5%. The company also intends to have a net leverage ratio of less than 2.0x by the end of this year. Camping World aims to boost its average revenue per member by 10% in the next 36 months. Currently, its 2.1 million Good Sam members generate average annual revenue of about $1,850 each.

Camping World’s growth initiatives include launch of a new peer-to-peer RV rental marketplace and a mobile service marketplace in the spring of 2021. It is investing heavily in product development to create “more efficient, more responsible, light weight, innovative and tech-savvy products both with RV’s and the products that complement them.”

On September 8, J.P. Morgan analyst Ryan Brinkman upgraded his rating for Camping World to Buy from Hold and increased the price target to $40 from $30 as he believes that the company will continue to benefit as consumers are looking for a safer form of travel during the pandemic.

In a research note to investors, the analyst highlighted the company’s rising EBITDA, which has quickly lowered financial leverage. He believes that the company’s scale gives it several advantages over smaller rivals, including “(1) gross margin-enhancing volume discounts; (2) more favorable terms with financiers; (3) the ability to offer consumers a wider assortment by tapping into the inventory available across its greater number of stores; and (4) an informational advantage in terms of consumer demand and pricing in the marketplace.” (See CWH stock analysis on TipRanks)

The Street has a Moderate Buy consensus for Camping World with 4 Buys, 4 Holds and no Sell ratings. The stock has surged a whopping 150% so far in 2020 and the average analyst price target of $38.86 indicates that an upside potential of about 8% lies ahead.

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