This year, Harley-Davidson (HOG) stock has fallen ~15.9%. The stock fell 15.6% in October alone, but has recovered by 12.0% this month. In comparison, auto stocks (XLY) Honda (HMC), Ford (F), and Ferrari (RACE) have fallen 1.6%, 1.5%, and 7.5% month-to-date, respectively. In 2017, HOG held the largest share of the US heavyweight motorcycle market, but underperformed other auto stocks and fell ~12.8%.
Targets for HOG dropped
Of the Reuters-surveyed analysts covering Harley-Davidson stock, 71% recommend “hold,” 24% recommend “buy,” and 5% recommend “sell.” Their consensus target price for Harley-Davidson is $42.60, slightly lower than its market price of $42.80. A month ago, their target price was $47.23.
Harley’s sales weakness
In the third quarter, HOG’s adjusted EPS rose ~95% YoY (year-over-year) to $0.78, and its motorcycle revenue rose 16.8% YoY with the help of a 16.7% YoY rise in its global motorcycle shipments. The company’s worldwide retail sales fell 7.8% YoY to 59,226 units, with its US retail sales falling sharply by 13.3% YoY and its international retail sales rising 2.6% YoY. Harley has been struggling to revive sales in its key markets for the last three years, with no signs of relief so far.
At the end of the second quarter, Harley-Davidson decided to shift the production of motorcycles for the European market from US factories to international factories to avoid steep tariffs. This move didn’t please Donald Trump, who warned HOG on Twitter that if it were to move production internationally, it “will be taxed like never before!” Continue to the next part, where we’ll compare mainstream automakers’ valuation multiples this month.