Here's What It Would Take For Polaris Shares To Be Attractive At This Price

Polaris Industries Inc.PIIJoseph Spaksecond-quarter results on Thursday. Investors looking to buy Polaris' stock near the $100 level need to believe it will trade higher to $100 per share next year, the analyst stated in his downgrade note. For this to happen, the company would need to boost its earnings per share to $6 in 2018 (to keep an 18x multiple on the stock) and then $7 per share the following year.

The problem: The Street is modeling a 2018 EPS of just $5.15 and upside to the Street implies a 3-percent revenue growth, which is difficult to justify as the company is losing market share in a competitive environment that is also hurting other motorcycle companies.

Polaris would also need to demonstrate a "hefty amount of margin improvement" in 2018 and an EBIT that is $240 million higher than 2017's expectations. In this case, the metrics appear to be even more out of touch as the company is expected to boost its promotional spending to the point where consumers "get trained on deals" and this will be difficult to break.

Bottom line, the bull case for Polaris appears to be a "stretch," and the stock is expensive relative to consensus estimates.

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