Winnebago Industries, Inc. (WGO) shares moved marginally lower to test trendline support. However, Winnebago could rebound after Citi upgraded the stock to Buy with a price target of $63 per share.

Key Takeaways

  • Winnebago shares tested trendline support after Citi upgraded the stock to Buy with a $63 price target.
  • Analyst Shawn Collins believes that a return to conventional travel is years away and that the attractiveness of recreational vehicles (RVs) will persist.
  • Traders should watch for a rebound from trendline support toward $52.29 or prior highs of around $59.00 over the coming sessions.

Citi analyst Shawn Collins believes that a return to extensive travel via planes, cruises, and hotels is several years away and that the attractiveness of RVs is here to stay. With Winnebago shares nearly 30% lower since early July, Collins believes that the stock's valuation is compelling given its strong fundamentals and the attractive underlying market dynamics.

Fundamental analysis involves looking at any data which is expected to affect the price or perceived value of a stock. Some of the fundamentals of stocks include cash flow, return on assets, and conservative gearing.

The RV Industry Association reported that total RV shipments were up 31.2% in September to 41,509 units, led by conventional travel trailers. In addition to easier pandemic travel, RVs have become a popular way to work and learn amid the work-from-home environment.

Chart showing the share price performance of Winnebago Industries, Inc. (WGO)
TradingView.com

From a technical standpoint, the stock fell to trendline support levels near $47.50 after tailing to break out from highs earlier this month. The relative strength index (RSI) appears slightly oversold with a reading of 38.55, and the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the stock could see some near-term consolidation, but the intermediate-term trend remains bearish.

Traders should watch for a rebound from trendline support to retest the 200-day moving average at $52.29 and potentially prior highs of around $59.00. If the stock breaks out, traders could see a move to fresh highs and a reversal of its downtrend. If the stock breaks down, traders could see a move toward Fibonacci support near $38.00 or $29.00, although the bearish scenario may be less likely to occur given the positive fundamentals.

The Bottom Line

Winnebago shares tested trendline support during Monday's session despite an upgrade from Citi to Buy with a $63 price target. Traders should watch for a potential rebound from trendline support over the coming sessions following the bullish analyst upgrade.

The author holds no position in the stock(s) mentioned except through passively managed index funds.