Polaris Industries Jumps After Upgrade

NEW YORK (AP) — Shares of leisure-vehicle maker Polaris Industries Inc. climbed Friday morning after an analyst said the company was undervalued, citing its potential to build its military business and expand to new markets. He upgraded his rating on the stock.

R.W. Baird analyst Craig Kennison said in a note to investors Friday that Wall Street estimates for the company's 2009 earnings are too low, while its shares are still well-priced despite nearly doubling from March lows.

Shares of Polaris, which makes snowmobiles, off-road vehicles and motorcycles, rose 9.8 percent, or $2.79, to $31.37 in morning trading.

Kennison upgraded Polaris to "Outperform" from "Neutral."

He increased his earnings estimate for the year by 5 cents to $2.90 per share. Wall Street analysts expect 2009 profit of $2.68. The Medina, Minn., company's guidance calls for yearly earnings between $2.50 and $3 per share.

Kennison said Polaris management has said sales for its discretionary vehicles are still falling, but they are working on boosting profit margins.

Further, he said the company can diverify and grow its product line as Polaris' traditional product categories slow. The chief executive, Scott Wine, used to work at the Pentagon, and there is potential to grow the military business, he said. It is partnering with Bobcat Co. to build utility vehicles and another, undisclosed venture.

"Mr. Wine was hired to acquire, in our view, suggesting further expansion in strategic markets," he said.

Kennison said he expects more product revelations at a July meeting with dealers.