William Blair Downgrades Latham Group on 2027 EBITDA Outlook

William Blair downgraded Latham Group Inc. (NASDAQ:SWIM) to Market Perform from Outperform on Tuesday, pointing to overly optimistic 2027 earnings expectations and lingering macroeconomic headwinds. The downgrade highlights pressures from elevated interest rates and transportation costs for the pool manufacturer.

"William Blair expects the new pool market to decline again in 2027 as higher interest rates dampen demand," according to an Investing.com report.

EBITDA Forecasts and Valuation

Central to the downgrade is William Blair's revised financial outlook for the company. The firm established a 2027 EBITDA estimate of $112 million for Latham Group, sitting 12% below broader consensus expectations.

Financial data shows Latham recorded EBITDA of $87.9 million over the last twelve months through the second quarter of 2026. In the public markets, the stock trades at a price-to-earnings ratio of 139.7.

Financial Results and Margin Pressures

The rating change follows recent mixed financial disclosures from the manufacturer. Latham reported a 14% increase in second-quarter sales to $197 million, but net income declined to $13 million, or $0.11 per share. That result missed analyst consensus expectations of $0.16 per share.

Beyond financing costs, analysts highlighted operational headwinds unique to the company's product line. Shipping oversized fiberglass pools introduces margin risks tied directly to freight and fuel expenses.

Dealer Sentiment and Industry Outlook

What is at stake for Latham is its positioning in a slowing residential construction market. Additional caution stems from regional perceptions of fiberglass pool products.

Stifel analyst Andrew Carter noted that dealer feedback indicates fiberglass perception remains muted outside of Latham's core geographic markets, adding to growth challenges as high borrowing costs constrain discretionary home improvement spending.