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Tuesday, Harley-Davidson shares received a new Buy rating from DA Davidson, accompanied by a $31 price target. The firm initiated coverage on the motorcycle manufacturer, currently trading on the New York Stock Exchange under the ticker (NYSE:HOG) at $20.82, near its 52-week low of $21.15. According to InvestingPro data, the stock trades at a modest P/E ratio of 5.97x, despite maintaining dividend payments for 33 consecutive years.
The company made headlines this morning with the announcement that CEO Jochen Zeitz is planning to retire at some point in 2025. Harley-Davidson has already started looking for a successor in the fourth quarter of 2024, with the intention of Zeitz staying on as CEO until the new leader takes over. The announcement comes as the stock has experienced significant pressure, declining 32.33% over the past six months.
DA Davidson's analyst Griffin Bryan provided initial reactions to the CEO's planned retirement and outlined a potential future for Harley-Davidson. The $31 price target is grounded on a sum-of-the-parts (SOTP) valuation, which includes an 11.0x price-to-earnings (P/E) multiple on the company's projected 2025 Harley-Davidson Motor Company (HDMC) earnings and a 7.0x P/E multiple on the projected 2025 Harley-Davidson Financial Services (HDFS) earnings.
The valuation reflects the firm's confidence in Harley-Davidson's future performance and its strategic initiatives under the current leadership. The search for a new CEO is expected to be thorough, aiming to ensure a smooth transition and continued growth for the iconic American brand.
Investors and market watchers will be keeping a close eye on Harley-Davidson's leadership transition and its impact on the company's strategic direction and financial health. With analyst targets ranging from $26 to $35, the endorsement from DA Davidson marks a positive note for the company amidst its executive search.
In other recent news, Harley-Davidson is actively searching for a new CEO as Jochen Zeitz plans to retire in 2025, after a five-year tenure. The company has enlisted an executive search firm to ensure a smooth leadership transition. Meanwhile, Harley-Davidson's Board of Directors has declared a first-quarter cash dividend of $0.18 per share, scheduled for payment in March 2025. This decision underscores the company's commitment to returning value to shareholders.
In analyst updates, Citi has reduced its price target for Harley-Davidson to $28, maintaining a Neutral rating due to concerns about the company's guidance and challenges in the retail environment. On the other hand, DA Davidson has reiterated its Buy rating with a $31 price target, noting the company's strategic efforts to reduce dealer inventories and align FY25 earnings guidance with forecasts. Despite recent earnings falling short of expectations, DA Davidson sees potential in the company's revised financial outlook. These developments come as Harley-Davidson continues to navigate a competitive motorcycle market.
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