KeyBanc analyst Brett Andress upgraded Harley-Davidson to Sector Weight from Underweight without a price target. While the analyst believes Harley-Davidson's ongoing challenges are unlikely to abate near-term, he views yesterday's selloff as more indicative of sentiment bottoming as estimates gravitate lower. With the stock down 14% since his downgrade, Andress believes the "next leg of downside will likely be harder to achieve" in the near-term against increasingly reset expectations. However, elements of the Harley-Davidson's fiscal 2020 guidance still look aggressive, keeping the risk/reward in "unfavorable territory," adds Andress.
Says no sustained down time in factories to date. Expects FY21 tariff exposure of $80M vs. prior view of $135M. Says seeing increased consumer appetite for products, brand. Says seeing "outstanding sell through" from Pan America motorcycle. Says inventory levels lower than originally planned due to strong demand. Says chip shortages constraining motorcycle inventory levels. Says seeing input costs increases in steel, aluminum.