S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68
S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68
S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68
S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68

Harley-Davidson Skids Into A Buying Opportunity 

Thursday, April 28, 2022 | Thomas Hughes
Harley-Davidson Skids Into A Buying Opportunity 

The Analysts And Institutions Are Hanging On To Harley-Davidson

Harley-Davidson (NYSE: HOG) hit the skids following the Q1 earnings release but this is an opportunity to buy into an iconic American brand. The results were mixed, to be sure, but highlight both the current situation and the opportunity available in the second half of the year. While supply chain and inflationary headwinds took their toll on bottom-line results the company is optimistic the situation will change in the second half. Specifically, the product mix had a negative impact on the margin because the company could not meet demand due to microchip shortages. Microchip shortages and the ensuing component shortages are expected to ease through the end of the year and that will be a tailwind for sales, margins, and earnings. 

As for the analyst, no commentaries have been issued since the earnings release and there has been very little activity this year at all. The takeaway, however, is that 9 analysts are still rating the stock at a weak Buy with a price target that is almost 45% above the recent price action. Add in a very strong institutional ownership and we see a firm bottom in share prices at the $35 level. What this means in the near term is that shares of HOG are range-bound but there is a major catalyst in the works. Assuming that supply chain constraints do ease revenue and earnings should outperform the Marketbeat.com consensus and that could lead to renewed interest among the analyst and institutions. As it is now, the institutions own about 90%, and, although the buy/sell activity has been vigorous, the net of buying and selling is relatively flat. 


Harley-Davidson Misfires On Inflation 

Harley-Davidson had a good quarter verging on great if not for the impact of supply chain disruptions and inflation. The company produced $1.5 billion in net revenue for a gain of 5.6% over last year and beat the consensus by 1180 basis points. The strength was driven by sales in all channels but mix was affected by availability. The core HDMC segment grew by 6% but saw its operating margin contracted by 290 basis points. On the bottom line, the company reported a solid $1.45 in earnings but this is short of the consensus by a penny due to mix and increased costs. Looking forward, the company is expecting to recoup the lost margin, however, and is reaffirming the guidance, the only question is if these improvements will show up in the 2Q results or if the issues will get worse? 

Another tidbit that should keep the market interested is the planned spinoff of Livewire. Livewire is Harley-Davidson’s EV segment and it is expected to merge with a SPAC called AEA-Bridges by the middle of the year. The deal should drive considerable upside for shareholders as HOG is trading at only 8X its earnings while profitable EV companies like Tesla are trading closer to 80X. We don’t expect Livewire to trade at Tesla’s level of course but there is a significant opportunity for a multiple expansion relative to shares of HOG. 

The Technical Outlook: Harley-Davidson Is At Rock Bottom 

Price action in Harley-Davidson corrected over the last year and hit a new low early this year. The stock has since bottomed and reversed course but the price action remains tepid. The stock pulled back to firm support prior to and following the earnings release but we view this level, near $35, as rock bottom. Assuming we’re right, price action is likely to trend sideways over the next few weeks or months until there is positive evidence that supply chain constraints are getting better. If that comes, shares of HOG should begin moving higher. 

Harley-Davidson Skids Into A Buying Opportunity 

Should you invest $1,000 in Harley-Davidson right now?

Before you consider Harley-Davidson, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Harley-Davidson wasn't on the list.

While Harley-Davidson currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Harley-Davidson (HOG)
3.3009 of 5 stars
$32.34-0.3%1.95%8.15Hold$51.20
Compare These Stocks  Add These Stocks to My Watchlist 

Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau MarketBeat is rated as Great on TrustPilot

© American Consumer News, LLC dba MarketBeat® 2010-2022. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information | RSS Feeds

© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.