Market Overview

Wedbush Downgrades Polaris, Concerned About 'Lackluster' ORV Business

Share:
  • Shares of Polaris Industries Inc. (NYSE: PII) have declined 30.25 percent year-to-date, touching a low of $105.49 on Monday.
  • Wedbush’s James Hardiman has downgraded the rating on the company from Outperform to Neutral, while lowering the price target from $156 to $117.
  • Hardiman expressed concern regarding the “lackluster” ORV business and limited upside to the 2016 margins.

Analyst James Hardiman explained that while he continued to be “impressed with the long-term potential of PII's motorcycle business, the anemic growth now apparent in the ORV business is more than offsetting motorcycle upside in the near term.”

Hardiman expects ORV retail sales in North America to remain in the low single digits going forward, with Wedbush’s Polaris contacts indicating that sales increased 3 percent during October, lower than the 3Q15 levels.

In addition, according to the Wedbush report, “Based on the sizeable outperformance of the motorcycle business relative to the ORV business we estimate that segment level mix will represent a 50 bp gross margin headwind in 2016.”

Headwinds are also expected due to FX, which is likely to be offset by fixed cost leverage benefit, as well as lower spirit lake and raw material costs. Hardiman also believes that “gross margin growing pains associated with the evolution of PII’s mix are likely to limit margin power in 2016.”

The 2016 EPS estimate has been lowered from $8.69 to $8.33, while the 2016 gross margin expansion estimate has been lowered from 80 bps to 40 bps.

Latest Ratings for PII

DateFirmActionFromTo
May 2019UpgradesMarket PerformOutperform
May 2019MaintainsBuy
May 2019UpgradesNeutralOutperform

View More Analyst Ratings for PII
View the Latest Analyst Ratings

Posted-In: James Hardiman WedbushAnalyst Color Downgrades Price Target Analyst Ratings

 

Related Articles (PII)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MANMaintains96.0
INTCMaintains57.0
CHNGInitiates Coverage On19.0
BRMaintains150.0
SLBMaintains41.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Brean Digs Into Osiris Therapeutics 10Q, Downgrades To Sell

Just How Inexpensive Are Emerging Market ETFs?