02:03 PM EDT, 07/16/2024 (MT Newswires) -- Power sport-focused companies Polaris (PII), Brunswick (BC) and Harley-Davidson ( HOG ) face a "tricky" setup heading into the latest earnings season, while toy company Hasbro ( HAS ) is poised for a beat-and-raise, Morgan Stanley said Tuesday.

The brokerage cut its respective price targets on the stocks of Brunswick, Polaris, Harley-Davidson ( HOG ) and toymaker Mattel ( MAT ) , while raising Hasbro's ( HAS ) target.

"(Second-quarter) earnings are set-up to be an important catalyst across our leisure coverage as concerns around the consumer and risk to (second-half) estimates are juxtaposed with cheap valuations and the prospect for rate cuts," Morgan Stanley said in a note to clients. The brokerage said stock performance across its leisure coverage has been weak since last quarter, with signs of higher promotions and concerns around tariff and freight costs hurting sentiment.

Morgan Stanley reduced its second-quarter and second-half financial outlooks for Polaris, Brunswick and Harley-Davidson ( HOG ) below Wall Street, saying it's "in the interest" of the companies to slash their full-year projections. "This seems to be priced into the stocks, with the focus likely to be the depth of the cuts."

The firm said Harley-Davidson ( HOG ) is most likely to see a positive flow-through on a potential outlook reduction, followed by Brunswick given "sidelined demand from quality investors," according to the note.

Hasbro ( HAS ) is expected to post second-quarter earnings of $0.81 a share, above the Street's $0.75 view, and lift its full-year estimate to reflect a better outlook for its Wizards of the Coast segment, according to Morgan Stanley. The brokerage expects the company to dismiss concerns around slowing MonopolyGO! data and stay "cautiously optimistic" on a turnaround in the toy segment.

Morgan Stanley cut its second-quarter EPS outlook for Mattel ( MAT ) to $0.17 from $0.24, versus the Street's $0.18 expectations amid a reduced sales assumption. The company is likely to maintain its full-year outlook.

"On toys, sentiment overall is relatively apathetic given headlines surrounding tariffs and freight and still relatively sluggish (point of sale) trends clouding visibility to embedded (second-half) accelerations," Morgan Stanley said.

Price: 61.95, Change: +2.44, Percent Change: +4.10