Bank of America just raised its EUR/USD forecast
On Thursday, BofA Securities analyst Robert Ohmes adjusted the price target for Harley-Davidson (NYSE:HOG) shares, decreasing it to $35.00 from the previous $40.00, while sustaining a Buy rating on the stock. The stock currently trades at $27.51, near its 52-week low, with a notably low P/E ratio of 6.2. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model. The move comes after Harley-Davidson unveiled its latest motorcycle lineup for the 2025 model year. The updated range includes a significant refresh of the cruiser category, the introduction of the new Street Glide Ultra, Pan America 1250 ST, Sportster S, and four new CVO models.
Ohmes noted that the new lineup is expected to provide a net pricing tailwind of 3-4 percentage points in 2025, based on the pricing of the new model year, excluding any potential mix shift. This pricing strategy comes at a crucial time, as InvestingPro data shows the company maintains a healthy 28.4% gross profit margin and has consistently paid dividends for 32 consecutive years. This forecast is supported by a 7-8% increase in the core prices of Road Glide and Street Glide models, along with a low to mid-single-digit percentage lift in cruiser prices. This pricing strategy comes after the discontinuation of the Softail Standard, which was the brand’s lowest-priced model in its cruiser segment.
The refreshed cruiser models are estimated to have contributed to approximately 21% of the new registrations up to November 2024. The updated cruisers boast several key feature changes, including new Milwaukee-Eight 117 powertrains, new ride modes, and new LED lighting and instrument displays. These enhancements are part of Harley-Davidson’s efforts to revamp its product offerings.
Despite the overall price increase for the cruiser and touring categories, Harley-Davidson is aiming to make its sport bikes more affordable. The company has implemented a high single-digit average price decrease in this segment, targeting entry-level consumers and aiming to broaden its market appeal.
Harley-Davidson’s strategic refresh of its motorcycle lineup and pricing adjustments are part of the company’s broader efforts to respond to market demands and consumer preferences, as it continues to navigate the competitive landscape of the motorcycle industry. With a strong free cash flow yield of 22% and multiple growth catalysts identified by InvestingPro, investors can access comprehensive analysis and 10+ additional ProTips through the platform’s detailed research reports. With the maintained Buy rating, BofA Securities indicates a continued positive outlook for Harley-Davidson’s stock performance despite the revised price target.
In other recent news, Harley-Davidson has experienced significant challenges, reporting a 13% drop in global retail sales, a 26% decrease in consolidated revenue, and a 34% decline in earnings per share to $0.91 in the third quarter of 2024. Despite these setbacks, UBS has maintained a neutral rating on Harley-Davidson shares with a steady price target of $35.00. In response to these challenges, Harley-Davidson is implementing measures to improve profitability and dealer support, focusing on reducing inventory and cost management. The company plans to reduce dealer inventory by 20% by year-end.
Harley-Davidson has also recently updated its 2025 motorcycle line-up, introducing several new and refreshed models. These recent developments come in light of analyst reports from Citi and Baird, both of which have lowered their price targets for Harley-Davidson due to concerns over high inventory levels and persistent retail sales declines.
Lastly, demonstrating its financial stability and commitment to investors, Harley-Davidson announced a quarterly cash dividend of $0.1725 per share. These are recent developments for Harley-Davidson.
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