Fox Factory (FOXF) faces limited earnings upside in 2026 as persistent end-market headwinds are expected to outweigh the benefits of the company's cost-reduction initiatives, BofA Securities said in a Tuesday note.
BofA said the company's Profit Optimization Initiative, which includes business line rationalization, supply chain and materials cost productivity, and operating expense reductions, should support margins in the second half of the year.
Aluminum supply disruptions affecting Ford's F-150 production could continue into the third quarter, weighing on Fox Factory's Aftermarket Applications Group, the firm said.
The firm also cited continued weakness in the Marucci Specialty Sports business due to industry softness, high retail inventories, and delayed product launches, prompting it to lower its 2026 and 2027 revenue and earnings estimates.
BofA downgraded the stock to underperform from neutral and lowered its price target to $20 from $24.
Fox Factory shares were down 9.4% in Tuesday trading.
Price: $16.70, Change: $-1.39, Percent Change: -7.68%