Harley-Davidson Stock Surges 5% on DA Davidson Upgrade
Harley-Davidson (NYSE:HOG) shares gained nearly 5% pre-market today after DA Davidson upgraded the company to Buy from Neutral and increased its price target to $47.00 from $38.00. The decision to adopt a more bullish stance was influenced by positive feedback from the motorcycle industry checks.
According to DA Davidson, their latest round of checks revealed a more optimistic sentiment from dealers compared to the previous assessment in May. It appears that April was likely the weakest month of the quarter for the company, as retail performance gradually improved throughout the second quarter. Furthermore, dealers made significant progress in clearing non-current inventory, and early indications suggest that pre-order demand for Harley-Davidson's new custom vehicle operation (CVO) product launch is surpassing expectations.
Looking ahead to Harley-Davidson's upcoming earnings release on July 27, DA Davidson believes that the company is positioned to surpass the relatively low expectations surrounding retail performance, second-quarter earnings, and their outlook for the second half of 2023.
| Symbol | Price | %chg |
|---|---|---|
| VKTR.JK | 90 | 0 |
| 603766.SS | 13 | 0.08 |
| 000040.KS | 447 | 0 |
| 603129.SS | 179.64 | 0 |
Harley-Davidson’s Price Target Cut to $36 Amid Slowing Retail Trends
Baird analysts reduced their price target for Harley-Davidson (NYSE:HOG) to $36 from $40, maintaining a Neutral rating on the stock. The revised outlook reflects concerns over declining retail performance and persistent inventory challenges faced by dealers.
Insights from dealer checks suggest U.S. retail sales are trending lower, with declines estimated in the high-single to low-double-digit percentage range for the quarter. Inventory levels remain a point of stress for dealers, further complicating the company’s efforts to stabilize performance.
A core challenge lies in Harley-Davidson's payment-sensitive customer base, many of whom appear to be pulling back amid financial pressures. While the brand retains significant value and loyalty, the analysts mentioned that these headwinds pose modest downside risks to 2025 expectations.
Given the current dynamics, the analysts adopt a cautious stance, opting to remain neutral as Harley-Davidson navigates through these challenging market conditions.
UBS Flags Potential Shipment Slowdown for Harley-Davidson
UBS analysts reiterated their Neutral rating and a $40 price target on Harley-Davidson (NYSE:HOG), highlighting concerns over potential shipment guidance cuts for the rest of the year.
According to the analysts, recent dealer feedback suggests Harley-Davidson may need to further reduce its shipment forecast due to worsening trends in the September quarter. July's performance was buoyed by favorable year-over-year comparisons from prior production disruptions, but performance has weakened across the subsequent months.
There had been dealer speculation about Harley shipping 2025 models early, in calendar 2024, to bolster shipments, but the company has confirmed it will adhere to its traditional model year schedule, launching in early 2025. Following a modest 2.5-point guidance cut in Q2, the analysts suggest another reduction could be forthcoming. Reports from several dealers indicate they have received no new bike deliveries in recent weeks and don’t anticipate additional inventory through the year's end, signaling a potential halt in shipments earlier than usual.
Harley-Davidson aims to keep dealer inventory flat year-over-year by the end of Q4, yet analysts question if this target is optimal. A flat inventory level would be 14% below pre-pandemic stock levels, even as retail sales have dropped by a cumulative 25% since then.
Harley-Davidson Shares Surge 12% on Strong Q3 Beat
Harley-Davidson (NYSE:HOG) shares rose more than 12% on Wednesday following the company’s reported Q3 results, with EPS of $1.78 coming in better than the Street estimate of $1.41. Revenue was $1.65 billion, beating the Street estimate of $1.37 billion.
The company reaffirmed its fiscal 2022 guidance, expecting HDMC revenue growth of 5-10% with an operating income margin of 11-12%.
According to the analysts at RBC Capital, the company had a really strong performance in the quarter, and no doubt that its turnaround efforts are taking hold. Management has gotten the company to a much better place to execute on demand, and demand seems to be OK for now, but tough to have a ton of confidence in 2023 given macro uncertainty and headwinds. The analysts raised their price target on the company's shares to $42 from $37 while maintaining their Sector Perform rating.
