Goldman analyst David Tamberrino said May channel checks appear "slightly more favorable" than the soft March and April. Dealers indicate poor weather in March and April led to some pent-up demand in May and the MY2016 inventory overhang has cleared. On the negative side, there is a glut of high mileage inventory coming from baby boomers who are selling used bikes and not replacing them with a new motorcycle, and checks indicate competitor Indian has started offering incentives on its bikes, the analyst wrote. Tamberrino rates Harley-Davidson a Neutral with a $53 price target.
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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.