What happened
According to data compiled by S&P Global Market Intelligence, lawn maintenance company The Toro Company's (TTC -0.76%) stock tumbled by almost 21% in price this week. This was hardly a shock and a surprise, as on Thursday it released underwhelming quarterly results that were soon followed by several analyst price target cuts.
So what
The third quarter of Toro's fiscal 2023 saw the company's revenue slide by 7% on a year-over-year basis to slightly more than $1.08 billion. More worryingly, under generally accepted accounting principles (GAAP) it flipped to a net loss on the bottom line of $15 million, against the healthy year-ago profit of over $125 million. That was its first quarterly shortfall in over 10 years.
The non-GAAP (adjusted) result looked better, at least, with a profit of $99.4 million ($0.95 per share). Yet that was below the third quarter of fiscal 2022's adjusted net income figure of $125 million.
The main culprit for the weakened results was a 35% decline in the take for Toro's residential segment, the company said.
That uninspiring news obscured a potentially quite positive development. Toro concurrently announced that it has entered into a strategic partnership with sprawling retailer Lowe's under which the latter will carry a range of Toro products. These include mowers, portable power equipment, and snow blowers.
Now what
Analysts tracking the stock were focused on the company's fundamentals, though. Several of those prognosticators cut their Toro price targets in response, including Baird's Timothy Wojs. He now feels the stock is worth $94 per share, down from his earlier $110. He maintained his neutral recommendation on the shares.
Raymond James' Samuel Darkatsh also took out a pair of scissors, trimming his level to $105 per share from $125. He's more bullish on Toro, though, as he kept his outperform (i.e., buy) estimation intact.
