Polaris ORV retail still strong through May: analyst

A research note with insight into May Polaris off-road vehicle retail trends has been provided to Powersports Business by BMO Capital Markets analyst Gerrick Johnson.

Johnson offers a look at how Polaris retail is fairing in times of the coronavirus, with the BMO analyst surmising that after an April of record retail sales for Polaris, “we believe May is on pace to outperform, perhaps up +20% or more. The desire to recreate outdoors, with family, during this time of business closures and stay-at-home mandates is driving strong off-road vehicle (ORV) demand. We do not expect this superior growth to be sustainable. And given our economic outlook, we fear valuation is in the process of getting stretched. We maintain our Market Perform rating.”

Johnson also reports that “April and May off-road vehicles (ORV) retail sales have been strong, and well ahead initial expectations. Sales are driven by 1) a recapture of lost March sales, 2) an acceleration of purchases from customers who would have bought later in the season, 3) government stimulus checks, 4) deferred financing and payment offers, and 5) new customers eager for outdoor recreation. So far, dealers are not complaining about lack of inventory or supply.

“With unemployment at 14%+ and stock prices still below pre-COVID levels, we fear the company could experience ORV retail sales declines later in the season as this current surge runs its course. We do not believe PII will see help from the farm economy, with corn prices -15% yoy. Data from AEM shows <100HP tractor sales, which we use as a proxy for utility SxSs, grew +3% in April after declining -16% in March (+1.5% for April/May combined).”

Dealers can gain further Q2 retail insight from Johnson and PSB when the Q2 Dealer Survey launches in mid-June. Want to be added to the list of survey recipients? Dealers only can send an email to dmcmahon at powersportsbusiness.com.

— Dave McMahon, editor

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