Jefferies Starts Arctic Cat (ACAT) at Buy
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Jefferies initiates coverage on Arctic Cat (NASDAQ: ACAT) with a Buy rating and a price target of $19.00.
Analyst Trevor Young commented, "ACAT (BUY, PT $19) has an opportunity to accelerate its turnaround/share gains amid new product launches and recalls plaguing peers. ACAT's stock is down ~75% over the last ~3 years as recalls, FX and margin declines have weighed. New management is early in its turnaround and multi-year product refresh, but ongoing recalls at PII position ACAT to accelerate share gains, particularly in SBS/ATV, to which it is underexposed. CAD headwinds abating and positive unit growth should help GM expansion; regaining its historical average could help ACAT achieve positive EPS, but management has to execute. A pending strategic partnership could be a meaningful near-term catalyst. ACAT also screens as an acquisition/go private target (EV/sales ~0.4x, below-peer margins, minimal leverage). We are +3% and +2% ahead of consensus FY17/18 revenue and +20% (~$5m) ahead on FY18 EBITDA."
Shares of Arctic Cat closed at $14.41 yesterday.
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