UBS Remains Sidelined on Polaris Industries (PII) Following Updated guidance
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UBS reiterated a Neutral rating on Polaris Industries (NYSE: PII), and cut the price target to $77.00 (from $90.00), following the company's updated guidance. PII is now expecting EPS of $3.30-$3.80 for the full year, below previous guidance of $6.00-$6.30. The company's top line is now expected to come in down mid to high-single digits.
Analyst Robin Farley commented, "PII updated FY'16 earnings and growth guidance, now expecting EPS of $3.30-$3.80 for the full year, 40-45% or $2.50-$2.70 below previous guidance of $6.00-$6.30. Top line is now expected to come in down mid to high-single digits for FY, below previous guidance of flat to down -2% previously. As every 100bps of top line is about $0.07 for PII, and every 100bps of margin is in the $0.48 range for EPS, we calculate about $0.42-$0.45 attributable to top line guide-down, with remaining ~$2.08-$2.25 due to lower margin and higher opex. Roughly 80% of the EPS guide-downs hits the gross margin line, implying gross profit dollars of $210M, or incremental gross margin hit of 250-300bps on top of previous margin guide for FY'16 of down 70-120bps (up 10bps to down -40bps in constant FX). Roughly half of EPS guide-down PII is attributing to margin dollar impact from delayed model yr '17 shipment, as PII has been revalidating new model line-up, incl. higher-margin RZR Turbos, plus lower P&A sales. Roughly $0.63-$0.68 is attributed to higher promotion costs and another $0.63-$0.68 to expediting product recall repairs, incl. more recent Turbo recall."
Shares of Polaris Industries closed at $76.79 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
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