2Q26 Preview: Sweet spot of broadening out trend, but valuation already embeds sustained upside

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2Q26 Preview: Sweet spot of broadening out trend, but valuation already embeds sustained upside

UpdateMcutting in 2027 following the encouraging June CPI report (see June inflation: Not a

Messi print). Nevertheless, the Fed and market rate backdrop are more hawkish than

they were 3 months ago, leaving the financing backdrop less supportive than

management teams may have anticipated when they last provided guidance

alongside 1Q earnings.

What we expect for 2Q / what to do with the stocks: Firmer retail exiting the

quarter provides a credible path to 2Q revenue upside, but we do not expect

management teams to relax their cautious stance on the balance of the year against

the backdrop of continued tariff & rate uncertainty. At the same time, we believe

revenue upside is likely already embedded as applying a through-cycle multiple to

current EVs implies revenue growth levels above historical averages for all three

companies ( Exhibit 8 ). As such, the debate now centers on whether powersports

stocks have re-rated ahead of a more durable recovery in retail and earnings, which

could leave the group vulnerable to a pullback if sustained improvement fails to

materialize. We maintain our Equal-weight ratings on Polaris (PII) and Brunswick

(BC), and our Underweight rating on Harley Davidson (HOG), and provide additional

company-level details below. We also provide high-level questions for Brunswick

ahead of the company's August 11th Analyst Day.

Exhibit 1: We expect beats at PII/BC in 2Q, but remain below for HOG despite

strong retail sales in motorcycles as we anticipate ongoing share loss within the

category and promotions

Revenue EBITDA EPS

2Q26 2026 2027 '25-27 CAGR 2Q26 2026 2027 '25-27 CAGR 2Q26 2026 2027 '25-27 CAGR

Polaris Total Revenue (ex-Corporate)