Mayville Engineering (NYSE:MEC) on Friday was downgraded to Neutral from a prior investment rating of Outperform by analysts at Baird. They said the metal fabricator is seeing a slowdown in its growth rate amid softer demand from customers who make commercial vehicles, construction equipment and farming machinery.
“We are moving to the sidelines with Mayville (MEC) up substantially since our upgrade last November as the shares now reached our $14 price target,” Mircea “Mig” Dobre, analyst at Baird, said in a June 9 report. “Key end-market volume growth (on- and off-highway) is set to peak in 2023 and moderate in 2024.”
A positive resolution to Mayville’s (MEC) lawsuit against Peloton Interactive (PTON) also might help to improve investor sentiment toward the company, according to Baird. Mayville (MEC) last year sued Peloton, claiming the at-home exercise company breached a contract when it canceled an order for stationary bike parts.
Demand for Peloton (PTON) equipment plunged as the pandemic faded and people went back to the gym. Mayville (MEC) had spent $35 million to $40 million to add factory capacity and another $3.7 million to $4.3 million for launch costs, according to figures cited by Baird.
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