Motorcycle pioneer Harley-Davidson (HOG) maintained the highest US market share in the heavyweight motorcycle segment in 2017. However, the company’s stock underperformed other auto stocks last year and fell ~12.8%.
In 2018 so far, HOG has fallen ~8.3% as of February 20, 2018. The company’s weak 2017 global shipments could be one of the key reasons for this dismal YTD (year-to-date) performance. In comparison, auto stocks (XLY) Honda Motor Company (HMC), Tesla (TSLA), and Fiat Chrysler Automobiles (FCAU) have risen 4.4%, 7.5%, and 23.9% YTD, respectively.
Recommendations on Harley-Davidson
According to the latest data compiled by Reuters, 66% of analysts covering Harley-Davidson stock have given it “hold” recommendations. Only 24% of analysts have recommended “buys” on the stock, while the remaining 10% have maintained a bearish view on the company and have given the stock “sell” recommendations.
On February 20, analysts’ consensus target price for Harley-Davidson was $50.57 for the next 12 months. This price target reflects an 8.4% upside potential from its market price of $46.64. Analysts’ consensus target price for HOG stock has fallen in the last month compared to their earlier target of $51.86.
In 4Q17, HOG reported a 74.1% jump in its adjusted earnings and managed to beat analysts’ consensus estimate by a narrow margin. The company’s fourth-quarter global shipments fell ~9.6% YoY (year-over-year) during the quarter, but its gross profit margin expanded slightly to 30.9% from 30.7% in the same quarter of 2016.
In 2018, the company plans to focus more on its international market sales to generate growth. During its 4Q17 earnings event, Harley-Davidson’s management also warned investors that its 2018 US sales could remain weak, which could be one of the reasons why analysts are still cautious on its stock.
In the next article, we’ll compare automakers’ valuation multiples after the auto industry’s 4Q17 earnings season.