Blue Bird (BLBD) Stock Forecast & Price Target

Blue Bird Corp has demonstrated a notable improvement in its gross margin, achieving approximately 21.4% for the quarter, which reflects a sequential increase and significant year-over-year growth, indicating enhanced pricing discipline and operational efficiency. The company is anticipated to see robust revenue growth at a high-single-digit rate in the near term, supported by increased bus sales and a focus on alternative-powered buses, which are expected to contribute positively to margins and free cash flow. Additionally, the expected expansion of EBITDA margins from around 15% in FY2025 to 16% by FY2027 reinforces a strong financial outlook, driven by a favorable mix of higher-priced, lower-emission models as the industry evolves towards cleaner alternatives.

The analysis reveals significant concerns regarding Blue Bird Corp's financial performance, particularly in its bus segment, where the share of powered buses in total deliveries has declined to approximately 48%, down from 54% the previous quarter. Additionally, EBITDA margins are projected to contract from 13.6% in FY2024 to a mid- to high-single-digit range by FY2026, with long-term margin targets being lowered. Furthermore, the company is facing headwinds from a 35% year-over-year decline in backlog units, increased labor wage pressures, and challenges in accessing capital markets, which collectively suggest an unfavorable outlook for revenue and margins in the coming years.