Harley-Davidson (HOG) Stock Slides as Takeover Speculation Fades

Harley-Davidson (HOG) stock is lower this afternoon after RBC Capital explained why an acquisition is unlikely.
By Rachel Graf ,

NEW YORK (TheStreet) -- Shares of Harley-Davidson (HOG) - Get Report are declining 2.13% to $47.35 in Wednesday afternoon trading as speculation that KKR (KKR) might make a takeover offer for the motorcycle manufacturer wanes. 

An acquisition is unlikely since a product cycle necessary for the company's growth probably won't come to market "for years," RBC Capital Markets contended in a note cited by Barron's.

"[W]e conclude that on base case assumptions, a takeout would have to occur around our PT of $43/share in order to yield a 20% IRR," the firm added. "As such, we place a low probability on a transaction."

R.W. Bairddowngraded the stock to "neutral" in a note released yesterday, similarly arguing that there is no evidence of a potential takeover by KKR.

Separately, TheStreet Ratings team rates the stock as  a "hold" with a ratings score of C+.

Harley-Davidson's strengths such as its revenue growth, notable return on equity and growth in earnings per share are countered by weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.

You can view the full analysis from the report here: HOG

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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