Tuesday, Polaris Industries (NYSE:PII) shares had its price target reduced by DA Davidson to $75 from the previous $80, while the firm maintained a Neutral stance on the stock. The decision comes in the wake of findings that point to a persistent downturn in North American off-road vehicle (ORV) retail sales throughout June. Additionally, there are emerging indications of a decrease in ORV shipments to North American dealers.
The analyst at DA Davidson reaffirmed the Neutral rating for Polaris but adjusted the price target downward, reflecting a more conservative outlook. This adjustment is based on recent checks that suggest an ongoing retail slump in the ORV market.
Despite this, the firm anticipates Polaris to report second-quarter earnings above the consensus, projecting an EPS of $2.42, which is $0.10 higher than the market's expectation.
However, the analyst also expressed concerns that Polaris might lower its full-year 2024 EPS guidance, given the current market trends. The new price target of $75 is derived from a price-to-earnings multiple of 10.0x, applied to the firm's revised fiscal year 2025 earnings estimate of $7.50 per share. This represents a significant decrease from the consensus estimate of $9.17 per share.
The reassessment of the price target by DA Davidson comes ahead of Polaris' second-quarter 2024 earnings release. The firm's latest checks have led to a cautious stance regarding the company's performance, prompting the adjustment in the anticipated earnings and the price target for Polaris shares. The revised figures reflect the challenges faced by the ORV segment, which is a key area for Polaris Industries.
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