Wedbush Remains Sidelined as Polaris Industries (PII) Announces Transamerican Auto Parts Acquisition

Wedbush reiterated a Neutral rating and $77.00 price target on Polaris Industries (NYSE: PII) following the company's announced acquisition of Transamerican Auto Parts Company (TAP) for $665M. The acquisition is being funded through the company’s existing revolver and term loan.

Analyst James Hardiman commented, "The acquisition is expected to be accretive to PII’s FY17E EPS by $0.25-$0.30, excluding purchase accounting and acquisition costs. However, the EBITDA margin for TAP is approximately 8%, suggesting that this will be dilutive relative to the (2016) EBITDA margin generated by PII, while the high-teens TAP returns on capital falls well short of returns for PII. Within three years after the close, PII expects annual cost savings/synergies of ~$20M, driven by efficiencies in procurement, distribution and an expanded product offering. There could also be some revenue synergies over time as well."

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 $76.15 yesterday.

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