Harley-Davidson, 'Compelling Turnaround,' on Citi Catalyst Watch

Harley-Davidson 'offers a compelling turnaround opportunity,' a Citi analyst says.
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Harley-Davidson  (HOG) - Get Report was added to Citi's 30-day Catalyst watchlist by an analyst who said the iconic Milwaukee motorcycle company "offers a compelling turnaround opportunity."

Shares of the company at last check were rising 3% to $41.82.

Analyst Shawn Collins, who has a buy rating on the company, raised his price target to $47 a share from $39. 

The analyst said in a note to investors that Harley-Davidson would unveil its 2021-2025 strategic plan and fourth-quarter results on a Feb. 2 webcast.

Collins said he expected investors would "receive greater clarity on priority markets that Harley plans to focus on, overall strategic direction, and most importantly financial goals."

Harley-Davison said it planned to concentrate on about 50 markets, primarily in North America, Europe and parts of Asia Pacific, that represent a high percentage of the company's expected volume and growth potential.

"We think Harley-Davidson offers a compelling turnaround opportunity," Collins said. 

"Harley is an iconic American brand but even before covid the company faced headwinds in the U.S. market (65% sales), including five years of declining sales driven by demographic headwinds and increased competition."

On Tuesday, Harley-Davidson unveiled its 2021 Softail lineup, highlighted by a new Street Bob 114, a restyled Fat Boy 114. 

Collins noted that this is a change from the past, when new lineups were introduced in August. The company said it made the change to better align with seasonality.

The analyst said the company would introduce a new motorcycle in the adventure touring category, the Pan America 1250, on Feb. 22.

In October, Harley-Davidson beat Wall Street's third-quarter earnings expectations amid an overhaul of its business model.

"The better-than-expected third-quarter numbers flow through our forward years of 2021E and 2022E, resulting in modest increases in revenue and earnings per share for those years," Collins said.