Shares of the Milwaukee, Wis.-based motorcycle manufacturer were lifted after UBS upgraded the stock to buy from neutral. The firm also upped its price target to $63 per share, from $60. The stock currently trades near $59.
The company's announcement on Wednesday to repurchase 20 million shares, was the main factor behind the stock's upgrade from UBS. This comes after Harley-Davidson said it would buy 15.9 million shares back on June 16, the analysts noted.
UBS analyst Robin Farley wrote in a note: 'This is primarily a call about valuation and balance sheet strategy, not a change in revenue or profit outlook. With Harley-Davidson down 18% in [the last 12 months], Harley's challenged revenue outlook may be factored into the stock."
The analysts believe the repurchases could also boost earnings per share. "The total of $1.5 billion in share [repurchases] is roughly $900 million incremental to our previous 2015 estimate of $632 million. Assuming 6% cost of borrowing, we estimate the buyback could be roughly $0.21 accretive to 2016 earnings per share, which was previously $4.60."
UBS also pointed out how the company's low debt levels could push the company to repurchase even more shares.
The analysts at Goldman Sachs hold a buy/neutral rating with a $68 price target. Robert W. Baird & Co. maintains an outperform rating, along with a $70 price target. The analysts at RBC Capital Markets hold an outperform rating with a $63 target.
Shares closed at $59, up 4.2% on the day fell 10.5% since the start of the year. The company has a market capitalization of $11.7 billion.
TheStreet Ratings team rates HARLEY-DAVIDSON INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HARLEY-DAVIDSON INC (HOG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, growth in earnings per share, increase in net income and attractive valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
You can view the full analysis from the report here: HOG Ratings Report