Generac is heading in the right direction after a bout of underperformance, according to Canaccord Genuity. Analyst George Gianarikas upgraded the stock to buy from hold and raised his price target by $71 to $175. His new price target implies an upside of 29.4% from Wednesday’s close. On Wednesday, Generac reported a beat for quarterly per-share earnings and issued better-than-expected revenue guidance for the year. Shares rose more than 8% on those results and forecast. GNRC 5D mountain GNRC jumped after earnings Gianarikas said that marked the end to a difficult year punctuated by a negative earnings preannouncement in October. The business struggled coming off a post-Covid boom and got hampered by extended lead times and an inventory glut, he said. He now sees the situation improving, noting the first quarter of 2023 should mark the final quarter-over-quarter revenue decline as management’s work to recalibrate the channel and adjust production begins having its intended impact. A return to year-over-year growth should start in the third quarter of 2023, he said. “We estimate that this process will likely clear the inventory issues that whipsawed Generac in 2022 and result in a return to growth — particularly as leading demand indicators and dealer growth remain healthy,” Gianarikas said in a note to clients Wednesday. Still, he noted risks remain that could challenge that improvement story. Gianarikas said dealer growth is key to fixing inventory levels and getting the company back to revenue growth in the short term. On a longer timeline, Gianarikas said there’s concern over how the impact of vehicle-to-home technologies will impact demand. But there’s also room for the company to growth, he said, specifically within the clean energy space. Gianarikas said he expects the company to improve its clean energy portfolio through organic work and mergers and acquisitions, with the potential to be a clean and home energy leader. Generac’s announcement of an electric vehicle battery was one example of its attempts to meet the moment and stay above competitors, he said. — CNBC’s Michael Bloom contributed to this report.