Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
Citi has reiterated a Neutral rating with a $39.00 price target on Harley-Davidson (NYSE: NYSE:HOG), amidst concerns over another potential guidance cut.
The forecast follows observed sales declines in September, with noted reductions in both production and shipments.
Harley-Davidson's stock has experienced volatility throughout the year, with its share price making two complete cycles in the trading range, sparked initially by robust retail sales in February and July.
The pattern of early excitement followed by disappointing trends has left investors skeptical about the company's promises of demand growth.
Despite these challenges, Harley-Davidson's management has the chance to mitigate the negative impact by focusing on inventory reductions as the company heads into 2025.
However, Citi has expressed worries regarding Harley-Davidson's capacity to match its 2024 performance next year, especially given the difficulty in replicating the success of the Touring segment, which is the company's most profitable category.
In other recent news, Harley-Davidson's earnings and revenue have seen significant developments. The company's Q2 profit surpassed expectations, driven by robust sales of its high-end Touring motorcycles, leading to a Q3 dividend of $0.1725 per share. However, analysts from UBS and DA Davidson suggest Harley-Davidson may need to revise its shipment guidance and full-year 2024 guidance due to inventory adjustments.
In merger news, Harley-Davidson announced a shift in production to Thailand and a $1 billion share repurchase plan. The company is also set to receive an $89 million grant from the Biden administration for expanding its Pennsylvania plant for manufacturing electric motorcycles.
Analysts have been active with Harley-Davidson's stock. Baird downgraded the company's stock from Outperform to Neutral due to concerns about retail performance and inventory, while Citi and UBS lifted their stock targets for Harley-Davidson, reflecting renewed optimism and anticipated benefits from the company's recent initiatives.
In other company news, Harley-Davidson revised its 2024 revenue outlook, indicating potential demand downturns and plans for more significant production cuts later in the year.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Harley-Davidson's financial position and market performance. The company's P/E ratio of 7.02 suggests it's trading at a relatively low earnings multiple, which aligns with one of the InvestingPro Tips highlighting that HOG is "trading at a low earnings multiple." This could be attractive to value investors, especially considering the current market concerns.
Despite the challenges mentioned in the article, InvestingPro data shows that Harley-Davidson has maintained a solid dividend yield of 1.98% and has raised its dividend for 3 consecutive years. This commitment to shareholder returns, coupled with the fact that the company has maintained dividend payments for 32 consecutive years, may provide some reassurance to long-term investors amidst the current volatility.
It's worth noting that while Citi expresses concerns about future performance, InvestingPro Tips indicate that analysts predict the company will be profitable this year. However, they also anticipate a sales decline in the current year, which aligns with the article's discussion of observed sales declines and potential guidance cuts.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Harley-Davidson, providing a deeper understanding of the company's financial health and market position.
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