What Happened?
Shares of power generation products company Generac (NYSE: GNRC) fell 3% in the afternoon session after Citigroup downgraded the stock's rating to 'Neutral' from 'Buy', citing valuation concerns.
The downgrade came despite Citigroup raising its price target on the shares to $219 from $138. The bank suggested that following a significant rise in the stock's price in recent months, the positive factors driving Generac's growth are now mostly reflected in its valuation.
Adding to the concerns, Citi also pointed to weakening residential demand and delayed project cycles, which reduce the company's near-term earnings visibility. The move suggests that while the bank has a higher long-term valuation for the company, it sees limited potential for further gains from the current price.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Generac? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Generac’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 5.4% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners.
A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap."
Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
Generac is up 20.5% since the beginning of the year, and at $189.13 per share, it is trading close to its 52-week high of $202.85 from August 2025. Investors who bought $1,000 worth of Generac’s shares 5 years ago would now be looking at an investment worth $991.12.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
