Baird analysts have turned more positive on Generac Holdings. They have upgraded the stock to Outperform. They believe the risk now is worth taking. This comes after a long phase where the stock struggled and disappointed investors.
Generac shares have fallen a lot. The stock is down around 25% from its high in the second half of 2025. Many investors have lost interest. Valuations are no longer stretched. According to Baird, this creates a good chance to buy before things improve. They see several factors that could help the company over 2026 and 2027.
One big reason is Generac’s move into large diesel generators. These are used by data centers and big industrial customers. This is a newer area for the company. Demand has picked up faster than expected. Orders and backlogs have grown strongly during 2025. Baird thinks this business alone could bring in hundreds of millions of dollars in revenue later in the decade. Current market expectations are still quite low.
Baird also believes Generac’s core commercial and industrial markets are near the bottom of the cycle. They do not think these markets are overheated. Some areas are already showing early improvement. Telecom demand is picking up. Traditional generator sales are also improving. Rental and mobile power demand seems to be stabilizing. When these trends start, they usually last for several years.
The home standby generator business is still under pressure. Baird expects this to continue into early 2026. However, comparisons should get easier in the second half of the year. Normal power outages and the chance of major storms could also lift demand more than expected.
Clean energy is another important factor. This segment has hurt profits in recent years. Because of that, management is now focusing more on costs and returns. Losses in this business are expected to shrink a lot. Generac is aiming to break even by 2027. In 2025, clean energy was still a big drag on earnings.
Baird expects Generac to give cautious guidance for 2026. Most of the growth may come later in the year. Even so, earnings should slowly improve. Diesel generator production is rising. End markets are recovering. Clean energy losses are fading.
Because of all this, Baird believes now is the right time to be invested. They say buying near the bottom of the cycle has historically worked well for this stock.