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BMO Downgrades Arctic Cat, Says Earnings Power Doesn't Support Valuation

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In a report published Monday, BMO analyst Gerrick L. Johnson downgraded the rating on Arctic Cat Inc (NASDAQ: ACAT) from Market Perform to Underperform. The price target was lowered from $28 to $25. The analyst believes that the company's underlying earnings power does not justify the current stock valuation.

"Even with solid execution in lowering inventory levels and repairing relations with dealers, the company still is faced with the challenge of growing its business in a highly competitive field, with a decelerating growth rate, dominated by larger, high-quality competitors with superior products and stronger reputations," Johnson commented.

Artic Cat has been working on bringing about positive changes, and dealers have, in general, reacted positively to these changes.

According to the BMO report, "The company's decision to invest $27 million into its two main manufacturing plants in Minnesota leads us to believe the likelihood that management is "cleaning up" the company for a sale is now lower, while the likelihood of its going it alone is now higher."

Latest Ratings for ACAT

Jan 2017BMO CapitalUpgradesUnderperformMarket Perform
Jan 2017JefferiesDowngradesBuyHold
Jan 2017Wells FargoDowngradesMarket PerformUnderperform

View More Analyst Ratings for ACAT
View the Latest Analyst Ratings

Posted-In: BMO Capital Markets Gerrick L. JohnsonAnalyst Color Downgrades Price Target Analyst Ratings


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