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Polaris Rises on Bullish Ratings from Morgan Stanley, BMO

Morgan Stanley analyst Billy Kovanis says Polaris benefits from a 'dominant and market leading position' and that it's 'underappreciated.'
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Polaris  (PII) - Get Polaris Inc. Report shares rose Wednesday after the sports-power vehicle maker received an initial overweight rating from Morgan Stanley and an upgrade to outperform from BMO.

Morgan Stanley analyst Billy Kovanis also put a $140 price target on Polaris. The company benefits from a "dominant and market leading position" in outdoor adventure and is about to undergo a "transformative shift" from selling internal combustion powered vehicles to electric ones, he wrote in commentary cited by The Fly.

Kovanis called Polaris “fundamentally undervalued,” adding that its strong fundamentals are “underappreciated,” Bloomberg reported.

Polaris recently traded at $120.16, up 6.14%, and has climbed 30% over the past year, as consumers have flocked to recreational products during the Covid pandemic.

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Meanwhile, BMO analyst Gerrick Johnson upgraded Polaris to outperform from market perform and boosted his share-price target to $136 from $100.

“We think the best case for acquiring PII shares is that sales of its off-road products for utility purposes, primarily to farmers, are under-appreciated,” Johnson wrote in a commentary cited by Bloomberg. The farmer’s market is in “the early stages of a multiyear cycle,” he said.

In addition, the Biden administration may well eliminate “onerous” tariffs, a move that could boost earnings estimates by 10%, he said.

Morningstar analyst Jaime Katz gives Polaris a wide moat rating, though she says fair value is $100. “We believe that its brands, innovative products, and lean manufacturing yield the firm a wide economic moat and that it stands to capitalize on its research and development, solid quality, operational excellence, and acquisition strategy,” Katz wrote in November. “However, Polaris' brands do not benefit from switching costs.”