Arctic Cat Jumps; Analysts Unimpressed By Q4 Report

Arctic Cat Inc.

rose sharply a day after the snowmobile maker posted unexpectedly high third-quarter profits but cut its earnings outlook. The Thief River Falls, Minnesota-based company changed hands recently at $34.01, up more than 13 percent. About 6 percent of the company's 12.9 million shares outstanding were held as short interest as of Jan. 15. Arctic Cat plans a $7 million charge in the current to help dealers reduce non-current inventory, which Chief Executive Christopher Metz said Thursday will help wholesale and retail growth of new products. Analysts were generally unimpressed. Wedbush's James Hardiman said he's "encouraged by the company's willingness to do the right thing" regarding inventories. But the company risks "diluting its brand" with discounts and adding to the segments "promotional environment" which ultimately hurts margins, Hardiman said. The analyst maintained a Neutral rating and $33 target, and said he'd like more new products and improvements to inventory management. With its market capitalization of about $400 million, seven of nine analysts following Arctic Cat maintain the equivalent of Hold ratings with two at Buy. Wedbush's Rommel Dionisio said with a recent lack of general snowfall in the U.S., Russia becoming an economic basket case and the 11 percent decline in the Canadian dollar, Arctic Cat's "macro challenges abound." Dioniso trimmed his 2015 earnings estimate 34 percent to $1.31, and his price target by nearly 15 percent to $29, while maintaining a Neutral rating.