UBS Remains Sidelined on Polaris Industries (PII) Following Updated guidance

September 13, 2016 10:05 AM EDT
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Price: $85.84 -2.17%

Rating Summary:
    5 Buy, 16 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 21 | Down: 36 | New: 11
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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."

For an analyst ratings summary and ratings history on Polaris Industries click here. For more ratings news on Polaris Industries click here.

Shares of Polaris Industries closed at $76.79 yesterday.



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