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On Friday, DA Davidson reiterated its Buy rating on Harley-Davidson stock (NYSE: NYSE:HOG), maintaining a $31.00 price target. Shares of the iconic motorcycle manufacturer, currently trading at $26.96 and near its 52-week low of $25.25, declined after the company reported earnings for the fourth quarter of 2024 that fell short of analysts’ expectations and provided a fiscal year 2025 earnings per share (EPS) forecast that was below the consensus. According to InvestingPro data, six analysts have recently revised their earnings estimates downward for the upcoming period.
Despite the disappointing earnings report and guidance, DA Davidson analyst Brandon Rolle found a silver lining in the company’s strategic plans. Rolle noted that Harley-Davidson’s FY25 EPS guidance is in line with DA Davidson’s forecasts, and he was encouraged by the company’s initiative to reduce dealer inventories by 30% in the first half of 2025. The company maintains strong fundamentals with a InvestingPro Financial Health Score of "Fair" and has demonstrated commitment to shareholder returns, maintaining dividend payments for 32 consecutive years.
Rolle believes the recent reset in FY25 expectations and the new guidance provide a compelling opportunity for investors. He emphasized that with a more achievable FY25 guide now in place, the current market valuation presents an attractive entry point.
The $31 price target set by DA Davidson is derived from a sum-of-the-parts (SOTP) valuation method. This valuation applies an 11.0x price-to-earnings (P/E) multiple to Harley-Davidson Motor Company’s (HDMC) FY25 earnings and a 7.0x P/E multiple to Harley-Davidson Financial Services’ (HDFS) FY25 earnings. The analyst’s positive outlook remains unchanged despite the recent market reaction to the company’s financial updates. Currently trading at a P/E ratio of 7.73x, the stock appears attractively valued, though InvestingPro’s Fair Value assessment suggests slight overvaluation. For deeper insights into HOG’s valuation and 12+ additional ProTips, including detailed financial analysis and future growth prospects, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Harley-Davidson has been the focus of analysts and investors alike due to recent developments. The motorcycle manufacturer reported a wider than expected loss in the fourth quarter of 2024, with a loss of $0.93 per share, falling short of analyst estimates of a $0.66 per share loss. Revenue also took a hit, falling 35% to $688 million, which was below the consensus estimate of $712 million.
In response to these results, Citi analysts adjusted their outlook on Harley-Davidson, decreasing the price target to $29 from the previous $31, while maintaining a neutral rating on the company’s shares. This adjustment was made in response to the company’s fourth-quarter margins, which fell short of expectations despite retail sales being generally in line with projections.
The company’s inventory reductions were slightly better than anticipated, but Harley-Davidson’s guidance for 2025, which is below market expectations, assumes unchanged retail sales. Citi analysts expressed skepticism about this projection, leading them to believe that the company’s full-year guidance may be overly optimistic. These recent developments provide a snapshot of Harley-Davidson’s current financial performance and expectations for the future.
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