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Arctic Cat shares fall after BMO downgrade

NEW YORK (AP) -- Shares of Arctic Cat Inc. tumbled Thursday, after a BMO Capital Markets analyst cut his rating on the maker of recreational vehicles and snowmobiles, saying slower sales could limit gains for the stock.

THE SPARK: Gerrick Johnson lowered his rating to "Market Perform" from "Outperform" and cut his price target by $10 to $40. He said he's had "disappointing" feedback from dealers regarding sales of Arctic Cat's off-road vehicles and snowmobiles.

THE BIG PICTURE: Johnson thinks the company's business remains healthy, with a "booming" off-road vehicles market, new products and potential to grow overseas.

Profit in the company's most recent quarter rose 17 percent on higher demand for new models, and in late October it raised the outlook for its fiscal year, which ends in March. Shares are up about 69 percent this year.

But Arctic Cat's fortunes are heavily tied to consumer confidence and spending. If the economic outlook deteriorates, sales could drop.

A representative for the company could not be immediately reached for comment.

THE ANALYSIS: Johnson cut his earnings estimates on Arctic Cat through 2015. For the current fiscal year, he now expects profit of $2.85 per share rather than $2.90 per share. The consensus for analysts polled by FactSet is for profit of $2.84 per share.

THE SHARES: Down $4.82, or 12.5 percent, to close at $33.3. Over the past 52 weeks, the shares have traded between $18.59 and $47.46.