UPDATE: DA Davidson Downgrades Clarus Corp (CLAR) to Neutral

DA Davidson analyst Linda Bolton Weiser downgraded Clarus Corp (NASDAQ: CLAR) from Buy to Neutral with a price target of $9.00.

The analyst comments "We think there is low gross margin visibility. Overall pricing in 2022 is expected to be +6%, and price increases are sticking. CLAR's price increases are outpacing its wage and materials inflation, but high freight costs reflected in COGS are still challenging. Spot freight rates are now declining, but we have low visibility into when CLAR's gross margin will benefit, given that its inventory is still rising, and that it needs to work down inventory with high embedded freight costs before lower freight costs are reflected in COGS. CLAR had expected a sequential decline in its inventory in 3Q22, but instead it was +1% sequentially and +31% Y/Y. CLAR's inventory reduction efforts are likely to be hindered by big box retailers' (like REI) sweeping efforts to reduce their own inventory, even in categories and brands with healthy POS performance. Retailers' inventory reductions are a key reason for CLAR's 4Q22E Y/Y sales decline of 14% in the Outdoor segment, which posted 7% sales growth in 3Q22, beating our +6% estimate."

For an analyst ratings summary and ratings history on Clarus Corp click here. For more ratings news on Clarus Corp click here.

Shares of Clarus Corp closed at $11.01 yesterday.

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