Winnebago (NYSE:WGO) has finally started to drop and I expect it will be weaker today due to a downgrade from Outperform to Market Perform by BMO Capital. The brokerage firm lowered the price target by 28% to $29. The firm is worried that Winnebago’s turnaround could be stalling out.

Competitor Thor Industries (NYSE: THO) reported earnings earlier this week.  Data from the company’s written Q and A (it does not host a live investor call) was mixed. Although Thor beat revenue estimates, earnings were only a penny better than expected due to lower product margins.

The company blamed the lower product margins on a continued shift towards lower priced RVs. Its motorized RVs, the category that Winnebago competes in, saw overall profit margins drop from 8.4% last year to 6% this year.

However, this negative trend is somewhat offset by strong demand. Revenue for Class A and Class C motor-homes was strong. Commentary focused on a continued shift, even within the motorized home category, towards lower priced models with less bells and whistles. These stripped-down models produce lower profit margins.

Despite the good numbers, Thor was down 2.5% after the close, an indication that this group is priced to perfection.

In addition, Camping World Holdings (NYSE: CWH) reported earnings late Wednesday. Camping World is an RV dealership so has the most up to date information on consumer demand. It missed analysts’ revenue estimates as consumers opted for lower priced towable RVs. As I’ve noted before Winnebago operates predominantly in the large, higher priced motorized part of the market.

I’m waiting to see how Winnebago trades on the open to determine when to sell these puts, which expire next Thursday. They are hovering in the money right now, as our strike price is $29.