Harley to take on more debt to accommodate stock repurchase plan

Milwaukee-based motorcycle manufacturer Harley-Davidson Inc. announced its board has authorized the company to take on $750 million in long-term debt to repurchase up to 15 million shares of its stock.

The new repurchase authorization is in addition to the share repurchases that the board authorized in February 2014, in which the company was authorized to repurchase up to 20 million shares of its common stock with no dollar limit.

The announcement drew mixed reviews on Wall Street.

Moody’s Investors Service said Harley’s decision to take on more debt to repurchase stock shares “is a credit negative event.” Still, Moody’s retained its “stable outlook” for Harley-Davidson Financial Services Inc.

UBS analyst Robin Farley upgraded Harley’s stock to “buy” from “Neutral” with a $63 per share price target.

However, Farley cautioned that her upgrade is a valuation call and not a change in profit or revenue outlook for Harley.

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