Hold Rating on REV Group Amid Merger with TEX: Shifting Stock Drivers and Cautious Outlook

REV Group, the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Mircea Dobre from Robert W. Baird downgraded the rating on the stock to a Hold and gave it a $55.00 price target.

Mircea Dobre has given his Hold rating due to a combination of factors surrounding the recent merger between REV Group and TEX. The merger has shifted the unique drivers of REVG’s stock performance to be more aligned with TEX, given the equity component involved in the deal. While the merger holds potential for long-term value creation, it is more relevant to TEX’s stock rather than REVG’s.
Despite the impressive performance of REVG shares over the past few years, driven by improved operations and higher margins, the specific elements that previously propelled REVG’s stock have largely been removed. The company’s CEO, Mr. Skonieczny, has significantly enhanced shareholder value, but he will not continue with the merged entity. As a result, the future performance of REVG shares is expected to mirror TEX’s stock price until the deal is finalized, leading to a more cautious outlook and a Hold rating.