Sector Snap: RV makers decline after Monaco cuts

On Thursday, the Coburg, Ore., company said it was closing three northern Indiana factories and eliminating 1,400 jobs by Sept. 17. It also said it will fire some administrative staff and cut executives' salaries.

Robert W. Baird analyst Craig Kennison said in a note to investors that the decision to close the plants was a good one given the "dreadful demand environment" for RVs.

However, he said its stock would continue to trade lower until the company restructures its credit agreement with its banks. He left his $7 price target unchanged.

Separately, Citi's Gregory Badishkanian cut his target price to $2.25 from $2.75 in a report, citing plummeting demand for Monaco's products. Recent figures from Statistical Surveys Inc. show May towable vehicle retail sales were down 30 percent for Monaco and 18 percent for the industry, he said.

"These trends supports management view that conditions are weak and plant shutdowns were necessary," Badishkanian wrote.

His new price target implies he expects shares to decline 18 percent over Thursday's close of $2.74.

Shares of Monaco lost 19 cents, or 6.9 percent, to $2.55 in afternoon trading Friday.

Monaco and other RV makers have struggled through an industry slump that has lasted several years and has been exacerbated recently by a weak consumer environment and record-high gas prices. Shipments of top-of-the-line Class A motor homes fell by nearly a third to 32,900 in 2007 from 46,300 in 2004, according to the Recreational Vehicle Industry Association.

Shares of other RV makers also fell Friday. Winnebago Industries Inc. lost 91 cents, or 7 percent, to $12.06. Thor Industries Inc. declined $1.17, or 5.1 percent, to $21.83. Fleetwood Enterprises Inc. gave up 31 cents, or 11.9 percent, to $2.29.