UBS has reaffirmed its Neutral stance on Harley-Davidson (NYSE:HOG) shares, maintaining a $40.00 price target. The firm's recent channel checks indicate that Harley-Davidson may need to reduce its shipment guidance further within the year.
According to the analysis, the company's performance appeared to decline throughout the third quarter, with July's year-over-year results benefiting from a comparison to production disruptions in the previous two Junes.
Harley-Davidson had previously adjusted its guidance slightly with the second-quarter results, reducing the midpoint by only 2.5 percentage points. However, UBS suggests another revision might be necessary and could already be underway. Dealers have reported not receiving new motorcycle deliveries from Harley-Davidson for several weeks and do not anticipate any more shipments for the remainder of the year, indicating an earlier than usual halt in shipments.
In other recent news, Harley-Davidson's earnings and revenue have seen significant developments. Despite DA Davidson projecting third-quarter earnings below the consensus, the firm maintains a Buy rating for Harley-Davidson, anticipating a downward adjustment of the company's full-year 2024 guidance due to destocking of U.S. dealer inventories. Meanwhile, Harley-Davidson's Q2 profit surpassed expectations, driven by robust sales of its high-end Touring motorcycles, leading to a Q3 dividend of $0.1725 per share.
In merger news, Harley-Davidson announced a shift in production to Thailand and a $1 billion share repurchase plan. The company is also set to receive an $89 million grant from the Biden administration for expanding its Pennsylvania plant for manufacturing electric motorcycles.
Analysts have been active with Harley-Davidson's stock. Baird downgraded the company's stock from Outperform to Neutral due to concerns about retail performance and inventory, while Citi and UBS lifted their stock targets for Harley-Davidson, reflecting renewed optimism and anticipated benefits from the company's recent initiatives.
In other company news, Harley-Davidson revised its 2024 revenue outlook, indicating potential demand downturns and plans for more significant production cuts later in the year.
InvestingPro Insights
Recent InvestingPro data and tips offer additional context to Harley-Davidson's current situation. The company's P/E ratio of 6.86 suggests it's trading at a relatively low earnings multiple, which aligns with one of the InvestingPro Tips. This valuation metric could be particularly relevant given UBS's concerns about potential shipment guidance reductions.
Another InvestingPro Tip notes that Harley-Davidson's stock has taken a significant hit over the last week, with data showing a 1-week price total return of -11.07%. This recent decline might reflect the market's reaction to the concerns raised by UBS regarding shipment guidance and inventory levels.
Despite these challenges, it's worth noting that Harley-Davidson has maintained dividend payments for 32 consecutive years, according to InvestingPro Tips. The company currently offers a dividend yield of 2.04%, which could be attractive to income-focused investors even in the face of potential operational headwinds.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Harley-Davidson, providing a deeper understanding of the company's financial health and market position.
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