Leisure: 2Q26 Powersports Systems Check: Raise estimates on refunds, but core trends mixed

Research evidence excerpt

M

Update

August 5, 2026 12:06 AM GMT

Morgan Stanley & Co. LLC

Leisure | North America

Stephen W Grambling

Equity Analyst

2Q26 Powersports Systems

Check: Raise estimates on

refunds, but core trends mixed

Molly Baum

Equity Analyst

Leisure

North America

Industry View

In-Line

What’s Changed

Polaris Inc. (PII.N)

From

To

Price Target

$69.00

$74.00

Stocks declined on earnings despite 2Q beats and raises given

demanding setups, mixed quality of the beats, and higher input

costs/cautious assumptions limiting 2H flow through,

particularly in 3Q. With retail trends potentially more choppy

amidst higher rates, market share gains increasingly key to

growth. Stay EW on PII/BC, UW on HOG.

Key Takeaways

HOG, PII, and BC all reported 2Q headline beats & raised FY26 guidance, though

the quality of upside varied given tariff refunds.

Stock underperformance on earnings reflects demanding setup, refund-supported

upside, and higher input costs & cautious assumptions limiting 2H flow through.

However, stocks have rebounded since, particularly this week, following

favorable macro developments and company-specific catalysts.

Share trends mixed: PII saw the strongest share performance (citing its 5th

consecutive quarter of ORV gains) while BC & HOG trends were mixed by

geography.

We adjust 2027 ests to reflect 2Q results (ex-IEEPA), expected flow through, and

incremental 2H cost pressures. Maintain Equal-weight PII & BC, Underweight

HOG.

Earnings learnings: PII, BC, & HOG all reported headline EPS beats, though the

quality of upside varied given tariff refunds received in the quarter (see Exhibit 3 ).

All three stocks underperformed on earnings, which we attribute to demanding

setups (see 2Q26 Powersports Preview) and limited 2H flow through, particularly in

3Q where all three companies guided or alluded to downside vs. consensus. The

stocks have rebounded since, particularly this week (8/3 & 8/4), driven primarily by

favorable developments surrounding a potential deal with Iran and company-specific

catalysts including BC's new long-term strategic targets (see BC Investor Day

report), PII MY27 product launches, and Sonic Automotive's (covered by Daniela

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