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Citi Group downgrades Weber stock to sell

Yahoo Finance anchors discuss analyst stock ratings for grill maker Weber.

Video transcript

BRIAN SOZZI: Another call we're watching today is Citigroup downgrading grill maker Weber to sell from neutral. The bank also slashed their price target on the stock, lowering it to $2.75, wow, as consumers pull back on discretionary spending. And, well, we've been talking with Weber for the past month. It has been a dismal, dismal post-IPO life for a strong brand in the marketplace like Weber.

There's just too many grills in the marketplace. And you're seeing now pick up in discounting. It's not just Weber. It's Traeger. This has been a absolutely terrible post-IPO trade for Weber and, of course, its biggest-- its other competitor.

BRAD SMITH: They must have read my grill replenishment rate story that's on

BRIAN SOZZI: The GRR, right? The GRR.

BRAD SMITH: Yes, it's one of the best metrics that you're going to hear about this entire inventory ridden earnings season. And particularly here, how it works is it is deflationary. When you have too many of an in-circulation inventory basis, too many of what consumers already have and do not need to purchase another one of, that is a deflationary item.

And so what we've seen from Weber, what we've also heard from Traeger, is that they're going to implement some of the inventory reduction levers on the sides of their businesses. And that just means that they're going to lean into other categories, whether that is everything that's annexed to the experience of the outdoor grill. And I think that's where we might see some more of the kind of accessories, some of the different elements that go into what that entire experience looks like. That's what they're going to lean into right now instead of producing and continuing to see the quantities and inventory go up of the grills that they're making.

BRIAN SOZZI: Since we're sharing childhood stories, my parents had the same grill for, like, 15 years. I remember there was a hole through it. I'm like, hey, dad, is this the actually safe? When you barbecue, there's a hole in the grill.

BRAD SMITH: My parents just got a new one, I think, two years ago. We had the same grill from the time that I was in third grade to the same grill that I actually used when I graduated from college at our graduation party.