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Malibu Boats, Inc.
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== '''Investment Thesis''' == Our investment thesis is long on the stock given its significant Return on Invested Capital (ROIC), technology leadership, and increasing expansion in the international markets. We expect upside on several aspects of the business as well as financials which are currently underappreciated by the investor community. The company is reinvesting capital into its business at a very high rate as seen by its latest capital expenditures and accumulated retained earnings. This could help expand its strategic acquisition strategy as well as product offering. Our price target, under the base case, is $60.26 with more potential upside given by the comparable company analysis which showed that the company is undervalued by investors relative to its peers. Key assumptions used in formulating the price target were: * Decreasing revenue growth rates for 2024 mainly due to the credit tightening I am currently noticing in the US economy. The company operated in a highly cyclical sector which makes its financial results correlated with the general economic consensus. * Increasing revenue growth rates for the entirety of 2025 due to the economic rebound the economists are expecting. * An expected gross profit margin of 25% for 2024 because of higher material and labor costs which are going to be offset by higher price per unit. * An expected gross profit margin of 27% for Q2 and Q3 of 2025 (tied to the economic consensus) since those are the quarters that bring on the most profit for the company. The seasonality factor is highly evident in its annual quarterly financial statements. * General and administrative expenses as well as sales and marketing expenses are forecasted to be around their historical levels of 5%, and 2% respectively. * Tax rate and minority interest are also expected to remain at their historical levels of 23% and 3% respectively.
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