Why Latham (SWIM) Stock Is Trading Lower Today
What Happened:
Shares of residential swimming pool manufacturer Latham (NASDAQ:SWIM) fell 23.9% in the morning session after the company reported fourth-quarter results and provided full-year revenue and EBITDA guidance that fell short of analysts' estimates as it expects more industry softness in 2024, projecting a ~15% decline in new pool installations in its markets. Despite the weakness, management noted it gained market share in 2023, especially with its fiberglass pools (fiberglass products accounted for ~73% of the company's in-ground pool sales in 2023). Adding to the positive, Latham exceeded analysts' operating margin and EPS expectations during the quarter. Zooming out, this was still a decent, albeit mixed, quarter, showing that the company is staying on track.
Following the results, Bank of America downgraded the stock's rating from Buy to Underperform (Sell) and lowered the price target from $4.5 to $2.6. The new price target represents a potential 13% downside to where shares traded when the downgrade was announced.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Latham? Access our full analysis report here, it's free.
What is the market telling us:
Latham's shares are very volatile and over the last year have had 69 moves greater than 5%. But moves this big are very rare even for Latham and that is indicating to us that this news had a significant impact on the market's perception of the business.
Latham is up 20.4% since the beginning of the year, but at $3 per share it is still trading 34.2% below its 52-week high of $4.56 from July 2023. Investors who bought $1,000 worth of Latham's shares at the IPO in April 2021 would now be looking at an investment worth $110.46.
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