Polaris shares surge 11% as Indian Motorcycle spin-off boosts profit outlook

Shares of Polaris rose more than 11% on Tuesday after the US power-sports vehicle maker said it would spin off its Indian Motorcycle division and projected a third-quarter profit, beating Wall Street’s expectations for a loss.

The company announced that private-equity firm Carolwood will acquire a majority stake in Indian Motorcycle as part of a deal expected to close in the first quarter of 2026.

Polaris did not disclose the financial terms of the transaction but said it expects annual earnings before interest, taxes, depreciation, and amortization (Ebitda) to improve by $50 million as a result of the move.

"Polaris and Indian Motorcycle both stand to benefit from this deal, which will enable each business to move faster, deliver industry-leading innovation," said Polaris CEO Mike Speetzen in a news release.

Indian Motorcycle contributed about $478 million in revenue, or roughly 7% of Polaris’s total sales for the twelve months ended June 30, 2025.

Sales positive for stock due to Indian Motorcycle's profit struggles

Analysts broadly welcomed the sale, viewing it as a long-awaited acknowledgment of Indian Motorcycle’s profitability struggles.

"Our first reaction to the news is positive, as Indian has struggled to achieve profitability in a challenging global motorcycle market ever since Polaris acquired it back in 2011," wrote Raymond James analyst Joseph Altobello on Monday.

"Further, it should allow management to better focus its attention and resources on its core powersports businesses."

Citi analyst James Hardiman noted that the motorcycle business has always been “a volume game,” and Polaris “struggled to drive the growth necessary to get the unit to consistent profitability.”

Morningstar analyst Jaime Katz said investors are likely to appreciate the decision to reallocate capital away from a lagging business toward the company’s more established product lines.

“We think investors are pleased that capital is being redirected from a laggard business into long-standing product lines on which the brand’s intangible value was built,” Katz said.

Keybanc analyst Noah Zatzkin added that the deal should free up resources for Polaris to concentrate more on its off-road vehicles, a core business segment facing intensifying competition.

Analysts expect Polaris to report roughly $1 per share in earnings for 2026, compared with more than $10 in 2022, which was its best year in recent history.

Stock jumps as company beats earnings expectations

Polaris also provided an early look at its third-quarter results, projecting sales at the high end of its range between $1.6 billion and $1.8 billion, ahead of analysts’ forecasts.

The company expects earnings per share between 31 cents and 41 cents, compared with Wall Street’s consensus estimate of a 16-cent loss, according to FactSet.

"The simultaneous positive pre-release of Q3 results... prompts us to lift our estimates and increase our price target to $54 from $41," said Scott Stember, analyst at Roth Capital Partners.

Despite Tuesday’s surge, Polaris shares remain down 24% over the past 12 months, in line with declines seen in Harley-Davidson stock.

Both companies have faced soft demand as high interest rates continue to weigh on discretionary spending.