Harley-Davidson Inc.’s stock (HOG) experienced a 4% increase in premarket trade on Friday, following an upgrade from D.A. Davidson. The stock was upgraded from neutral to buy, with the expectation that second-quarter retail sales would surpass previous worries.
In a note to clients, analyst Brandon Rolle expressed optimism about HOG’s upcoming earnings release, stating that the company is positioned to exceed the currently low expectations surrounding retail, second-quarter earnings, and their outlook for the second half of the year. As a result, the analyst raised his price target to $47 from $38.
Dealers’ feedback in the latest round has been more positive compared to early May. They noted that April was likely the worst month of the quarter, and retail sales started to improve thereafter. Additionally, dealers have made significant progress in reducing excess inventory, signaling a positive trend for the company.
Rolle mentioned that, on average, dealers reported that their MY22 inventory accounted for less than 10% of their new bike inventory as of June. Many dealers indicated that they had a shortage of new bike inventory in July, as Harley-Davidson demonstrated more discipline with their second-quarter U.S. shipments and dealers actively sold off used inventory.
There are further positive indications for Harley-Davidson, including stronger pre-order demand than expected for their new CVO product launch. Dealers reported that the demand has exceeded Harley-Davidson’s own projections.
While the stock has experienced a decline of 12% year-to-date, it is important to note that the S&P 500 has seen an 18% gain during the same period.
