Baird analysts reduced their price target for Polaris Industries (NYSE:PII) to $72 from $84 while maintaining an Outperform rating on the stock. The revised outlook reflects growing challenges in the powersports market as consumer debt pressures weigh heavily on demand and dealer sentiment.
Recent checks with 37 dealers highlight the significant hurdles faced by the industry. Rising debt burdens have outpaced consumer income growth, leading to dwindling interest in powersports products. According to the analysts, dealers report a stark lack of customer activity, with some describing the market as nearly stagnant.
Polaris has made efforts to address inventory issues, targeting a 15-20% reduction in dealer stock. However, the analysts suggest that further cuts may be necessary to align with the subdued demand environment. Compounding these challenges are concerns about global trade policies, which threaten to disrupt supply chains and add uncertainty to the company’s operations.
While the long-term prospects for Polaris remain intact, the analysts mentioned that the short-term outlook is clouded by economic pressures on consumers and heightened risks for dealers. Investors with shorter time horizons are advised to approach cautiously as the industry navigates these headwinds.