That’s based on strong fundamentals.
Harley recently traded at $37.39, up 2%, and has firmed 1% year to date.
After Tuesday’s investor day for Harley, “Our top takeaways were:
“(1) HOG is very pleased with the motorcycle division’s margin performance, given already overcoming [5 percentage points] of headwinds from raw material and supplier price increases in the second and third quarters that are expected to continue in the fourth quarter,” analyst Robert Ohmes wrote in a commentary.
“Higher new model pricing is likely to be seen in January, [along with] a mix of higher margin new model launches, as HOG has eliminated new development of low margin motorcycles.
“(2) Harley Davidson Financial Services division’s long-term outlook is strong, with an opportunity to increase financing penetration of used motorcycles from roughly 25% today,” Ohmes said
“HOG’s new HD-1 Marketplace for used motorcycles [and its] new certified preowned program are driving increases in financing penetration….
“However, normalization of reserve allowances and loss rates could be a $100 million headwind compared to the division’s strong 2021 profitability,” he said.
“(3) HOG 2021 product strategy continues to play out well, with the new Sportster S voted the Best Cruiser of 2021 by Motorcycle.com,” Ohmes said
He also cited “the Pan America 1250 driving market share gains in Adventure Touring (a new category for HOG) and expected to ramp-up in 2022, as the bike attracts new HOG customers that tend to be higher income experienced riders.”