NFI Group Inc

NFI Group Inc (TSX: NFI), formerly New Flyer Industries Inc, is a Canada-based bus and motor coach manufacturer and parts distributor in North America, with approximately 32 fabrication, manufacturing, distribution, and service centers located across Canada and the United States.

Why Investors should Book Profit?

• Slashed Financial Guidance: NFI shares plummeted on Monday, down ~24% after the bus maker slashed its financial forecasts amid wide-ranging supply chain problems tied to the COVID-19 pandemic. NFI Group, which makes a range of gas and electric-powered buses and coaches, warned in a release late Friday afternoon that it expects full-year revenue; adjusted EBITDA and capital expenditures to be lower than previously anticipated.
• Charted Into Bearish Trend: The company charted into bearish territory, with stock plummeted ~24% on Monday after it came up with new guidance and weighing on the company’s valuation. A long bearish candle stick along with unprecedent volume indicating that pain could be deeper and long.

Technical Price Chart (as on September 20, 2021). Source: Refinitiv, Analysis by Kalkine Group

• Moved Below the Crucial Long-term and Short-term Support Levels: After NFI shares knocked off ~22%in a single trading session, its shares moved decisively below the crucial short-term as well as long-term support levels of 50-day and 200-day SMAs, which act as crucial support in an underlying. Moreover, a strong move below the 200-day SMA indicates that the stock has entered a long-term bearish zone.

Technical Price Chart (as on September 20, 2021). Analysis by Kalkine Group

Stock Recommendation: The company now sees its FY21 revenue coming in between USD 2.3 billion to USD 2.5 billion, down from prior expectations of USD 2.8 billion to USD 2.9 billion. It also expects to report adjusted EBITDA in between USD 165 million to USD 195 million, down from a prior forecast of USD 220 million to USD 240 million.  Cash capital expenditures are now expected to come in at USD 35 million, down from USD 50 million which the company stated last month. NFI also stated that it now expects to see a significant YoY decline in its adjusted EBITDA in the next two quarterly periods.  Hence, we recommend a “Sell” rating on the stock at the current market price of CAD 23.49 on September 21, 2021.

Technical Price Chart (as on September 21, 2021). Source: REFINITIV, Analysis by Kalkine Group

Disclaimer

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