Tuesday, Baird analyst adjusted the price target for Harley-Davidson (NYSE:HOG) stock to $36.00 from a previous $40.00, maintaining a Neutral rating. The revision follows recent assessments of U.S. retail trends for the motorcycle manufacturer. Currently trading at $29.69, near its 52-week low of $29.46, InvestingPro analysis suggests the stock is currently overvalued despite its attractive P/E ratio of 6.7x.
Baird's report indicates that U.S. retail sales for Harley-Davidson were expected to decline at a high single-digit to low double-digit percentage rate during the quarter. This trend is attributed to a decrease in purchasing power among payment-sensitive riders, who are considered a core customer segment for Harley-Davidson. InvestingPro data reveals that 12 analysts have revised their earnings downward for the upcoming period, with revenue expected to decline by 29% this year.
The analyst also noted that inventory levels continued to be a point of concern for dealers. Despite this, the value of the Harley-Davidson brand was acknowledged, but with an outlook that suggests there might be slight downside risk to the company's 2025 financial expectations. One bright spot highlighted by InvestingPro is the company's impressive 32-year track record of maintaining dividend payments, demonstrating long-term financial stability despite current challenges.
Baird comments reflect a cautious stance on the stock: "Our work suggests U.S. retail was on pace to fall at a HSD-LDD% pace during the quarter, while inventory remained a source of stress for dealers." The analyst further elaborated on the consumer base, stating, "Payment-sensitive riders (a core Harley-Davidson buyer) appear to have simply run out of gas."
The revised price target and ongoing neutral outlook suggest that Baird analysts see limited potential for Harley-Davidson stock in the near term, preferring to stay on the sidelines until there's a clearer indication of the company's financial trajectory.
In other recent news, Harley-Davidson, the iconic motorcycle manufacturer, announced a quarterly cash dividend of $0.1725 per share, underscoring its financial stability and commitment to investors. However, the company faced significant challenges in the third quarter of 2024, reporting a 13% drop in global retail sales and a 26% decrease in consolidated revenue. Earnings per share also declined by 34% to $0.91, despite a nearly 10% growth in the touring segment that helped stabilize U.S. retail sales.
Citi, in its recent analysis, reduced the price target for Harley-Davidson from $39 to $34 while maintaining a neutral rating. The firm cited high inventory levels and a history of persistent retail sales declines as reasons for the adjustment. In response to these challenges, Harley-Davidson is implementing measures to improve profitability and dealer support, with a focus on reducing inventory and cost management. The company plans to reduce dealer inventory by 20% by year-end. These are some of the recent developments for Harley-Davidson.
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