As previously reported, Longbow downgraded Harley-Davidson to Underperform from Neutral. with a $40 price target. Analyst David MacGregor's dealer checks indicate wholesale shipments at the low end of the guidance range. Dealers said inventory continued to rise during July/August and financing promotions ended in mid-August leaving no promotions to clear inventory before mid-year 2017 shipments. MacGregor expects an increasingly competitive market environment in addition to to internal initiatives with higher levels of investment and margin headwinds, and does not see a positive catalyst for shares over the next 18 months.
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Harley-Davidson continues to expect: HDMC revenue flat to down 9% and operating income margin of 12.6%-13.6%, HDFS operating income flat to up 5%, LiveWire electric motorcycle unit sales of 1,000 to 1,500 and Harley-Davidson capital investments of $225M-$250M.
Morgan Stanley assumed coverage of Harley-Davidson with an Overweight rating and $50 price target. Harley-Davidson is an iconic brand with leading market share in the U.S. motorcycle industry and "a fiercely loyal customer base," says the analyst, who believes a refocused strategy under new leadership, along with strong capital allocation discipline, will lead to upside to consensus earnings estimates.