Polaris shares up after affirms outlook, upgraded

By James B. Kelleher

CHICAGO (Reuters) - Shares of Polaris Industries Inc (PII.N) rose as much as 10 percent on Wednesday after the U.S. maker of all-terrain vehicles, snowmobiles and motorcycles confirmed its 2009 profit forecast and a brokerage upgraded the stock.

Polaris said in a filing with the U.S. Securities and Exchange Commission that it still expects to report full-year earnings of $2.70 to $2.90 per share with total revenue down 20 percent to 25 percent.

Wedbush Morgan raised its rating on the stock to "outperform" from "neutral" and lifted its price target to $47 from $34, citing strong dealer response to the company's new lower-priced vehicles and lower-than-expected discounting.

Polaris and other makers of recreational vehicles and vessels, including Brunswick Corp (BC.N), Harley-Davidson Inc (HOG.N) and Winnebago Industries Inc (WGO.N), have enjoyed a summer rally due to signs the worst of the downturn may be past and hopes that the sharp sales declines in recent years may be coming to an end.

Upbeat comments from top policymakers like U.S. Federal Reserve Chairman Ben Bernanke, who said on Tuesday he believes the recession has likely ended, have also helped the sector.

"Investors are beginning to get comfortable with notion that there will be some purchases of big ticket leisure items," said Hayley Wolff, an analyst at Rochdale Securities.

The downturn has been especially pronounced for RV makers because weak customer demand has been accompanied by a sharp drop in dealer inventory.

But many RV dealers have succeeded in clearing their showrooms and are now finally putting in new orders. In a note late last month raising his target price on Winnebago, Citi analyst Greg Badishkanian said that if the restocking trend holds, "a significant improvement in the economy is not necessary for the business to improve."