Polaris hosted and factory tour and snowmobile riding event for sell-side analysts on Friday, Feb. 22, at its Roseau, Minn., manufacturing plant.
BMO Capital Markets analyst Gerrick Johnson continues to rate shares of Polaris as “outperform” following the meeting.
“Though little new information was shared, it was clear to us that
management is still fully confident in the state and trajectory of its business,” Johnson writes in a research note provided to Powersports Business. “While snowmobile sales lag, we think the off-road and motorcycle businesses continue to grow robustly. We believe management is especially excited about the upcoming re-launch of the Indian Motorcycle later this year for model 2014.”
“We are bullish on PII given its exposure to the hot recreational side-by side (SxS) segment of the off-road vehicle industry (ORV), where PII is well positioned to capture sales from rapidly growing market. We believe this trend still has a lot of room to run. We also believe PII is undergoing a long-term transformation to become the worldwide leader in producing, marketing, and distributing small vehicles for both utility and recreation. PII’s innovation has helped it also take share in Utility SxSs, ATVs, small electric vehicles, and motorcycles.”
Other takeaways from Johnson’s report on the event:
“Management referred to the recent MY 2013 Ranger 900 XP introduction as, ‘not a home run, but a grand slam home run.’ We had discussed in a previous notes … the agricultural and utility communities had been yearning for new innovation and more power.
“This new utility SxS vehicle, with its leading displacement, longer wheelbase, better ground clearance, and pro-fit cab system, hit the exact right mark for what this customer wanted.
“Meanwhile, management was also exuberant about the initial reception to the RZR XP 900 Jagged X. This limited edition RZR, which is essentially a four-seat RZR 900 XP converted into a two-seat with more power (94HP), longer wheel-base (107”) and better stability. This $22,000 vehicle was said to have sold out almost instantly, with the company then doubling production. We believe only several hundred were made, thus making this edition moderately, but not hugely, impactful to the 1Q results. More important, it is a sign to us that, even with competition from Arctic Cat (Wildcat) and BRP/Can-Am (Maverick), the high-performance side-by-side market is still quite robust.”
“The snowmobile ride portion of the event was an important part of the experience. We think it is always good for analysts to familiarize themselves with the products and learned more about how they perform. And, of course, we think it is always good to remind ourselves of how much of a blast snowmobiling can be.
“Getting a taste for why middle income folks are spending $8,000 for a Polaris 600 Indy Rush or $11,500 for an 800 Polaris Switchback in what is still an uncertain economy.
“And with financing as low as 5.99% for 60 months, the monthly payment for the Indy and the Switchback is $150 and $225, respectively. This may not be an insignificant amount of money, but cheaper than a trip to Disney World, Cancun or even a night out in Minneapolis. Based on our research, we think the snowmobile season in the U.S. was better than last year but, still below plan and expectations. Snow and sales results can be highly localized, but dealers in the northeast have complained about thin snow pack owing to warm temperatures, while some upper Midwest dealers are happy they are seeing snow, but disappointed that it came late.
According to the National Weather Service, average snow coverage area in the U.S., as well as snow depth is better than last year, but it arrived later. Snowfall totals for 2012-2013 did not overtake those from last year until mid-December, and not until late December for the vitally important Upper Midwest.”Click here for reuse options!
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