REV Group Inc. (NYSE: REVG) may not seem all that exciting on the surface, but this 2017 initial public offering opened strong. If analysts are correct, now that its post-IPO quiet period has ended, then investors in REV Group might have even more upside. Unfortunately, the initial trading reaction to that new analyst coverage has so far not been that positive.

REV Group manufactures emergency and specialty vehicles. This company is a leading designer, manufacturer and distributor of specialty vehicles and related aftermarket parts and services. It serves a diversified customer base, primarily in the United States, through three segments: Fire & Emergency, Commercial and Recreation.

When REV Group priced its 12.5 million share IPO at $22 apiece in late January, the shares initially opened up at $25.75. As of Friday’s closing bell, REV Group shares were at $27.59.

What should stand out about the offering was that the price range was $19 to $21 per share, so the $22 per share price that raised about $275 million was above the range and went even higher. Goldman Sachs, Morgan Stanley and Robert W. Baird were listed as the lead managers.

24/7 Wall St. has tracked several analyst calls, and some color has been added if available.

Credit Suisse initiated coverage with an Outperform rating and assigned a $33 price target. Credit Suisse noted that its post-IPO structure comes with a strong balance sheet that will enable the company to invest organically and to pay a dividend. The firm also thinks that the balance sheet will leave ample room for M&A, in an effort in which it already has a reasonable track record. Credit Suisse’s $33 target price on REV Group was based on its expected 2019 enterprise value to EBITDA multiple of 10.0 times and price to earnings multiple of 16.5 times.

Robert W. Baird initiated coverage with an Outperform rating and assigned a $31 price target.

Wells Fargo initiated coverage with an Outperform rating and assigned a valuation range of $30 to $33 per share. The firm’s investment thesis noted:

We believe REV Group has strong growth potential driven largely by internal initiatives. We expect the company will double Adjusted EBITDA F2016-F2019, and we believe there is upside potential to that driven by faster end market growth and/or incremental acquisitions. Management experience and track record at REV Group (doubling Adjusted EBITDA F2014-2016) suggest ability to execute.

Stifel initiated coverage with a Buy rating and assigned a $33 price target.

Deutsche Bank initiated coverage with a Hold rating and assigned a $30 price target.

Morgan Stanley initiated REV Group with an Equal Weight rating and assigned a $30 price target.

Investors must have hoped for even more in implied upside because the stock’s post-coverage did not generate any added excitement, despite the notion that even most of the Hold and Neutral ratings came with upside on their prices.

UPDATE 1:30 p.m. Eastern Time: One additional disappointment, which had not been seen in the early hours, was that Goldman Sachs was only willing to issue a Neutral rating — with a $24 price target, under the current price and weaker than the other major firms were giving for targets.

After about 40 minutes of trading on Tuesday, REV Group shares were down 2.1% at $27.01, and its post-IPO range since late in January has been $24.50 to $29.29. UPDATE 1:30 Eastern Time: REV Group shares were last seen down 3.3% at $26.67 as of 1:30 p.m. Eastern Time on Tuesday. The trading volume was not even 250,000 shares.

Three items stood out in the IPO paperwork on its past finances:

• Net sales were $1,721 million, $1,735 million and $1,926 million for fiscal year 2014, fiscal year 2015 and fiscal year 2016, respectively, which represents a compound annual growth rate, or “CAGR,” of 3.8%.
• Net income was $1.5 million, $23 million and $30 million for fiscal year 2014, fiscal year 2015 and fiscal year 2016, respectively, which represents a CAGR of 173%.
• Adjusted Net Income was $14 million, $34 million and $55 million for fiscal year 2014, fiscal year 2015 and fiscal year 2016, respectively, which represents a CAGR of 56%.

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