A recent research report by two stock analysts at BMO Capital Markets Corp. projects a bullish outlook for Milwaukee-based Harley-Davidson Inc.
BMO analysts Gerrick Johnson and George Panagopoulos assigned an "Outperform" rating to Harley's stock, which trades with the "HOG" ticker symbol.
"Dealer feedback and recent sales and registration data indicates that Harley-Davidson motorcycle sales have rebounded nicely from a late summer slowdown. Consumers and dealers seem especially pleased with new motorcycle models, including 110th Anniversary editions, the new CVO Breakout, the redesigned Street Bob, additions to the HD1 program, and hard candy paint jobs," the report stated. "We believe HOG is on pace to report 4Q retail unit sales growth of 9 percent worldwide (10 percent in the U.S.). Furthermore, we believe the long-term health of the brand and a growing outreach program should help continue to grow retail unit sales in the high-single-digit range for the next several years. Given higher selling prices, restructuring savings, and leverage over fixed costs, we anticipate that this retail sales growth will result in EPS growth of more than 20 percent for the next two years."
The analysts increased their Harley earnings per share (EPS) estimate for the full fiscal year in 2012 to $2.73 from $2.65, and they are projecting a 2013 estimate of $3.50 and a 2014 estimate of $4.00.
"We continue to rate the shares of Harley-Davidson (HOG) Outperform with a price target of $62. We like HOG for both the short and long term. The company is growing sales through innovation and quality products. We also believe the company has been successful in attracting new riders and broadening its customer base. Benefits from restructuring (which are almost completed) and operating expense savings should allow these top-line gains to fall to the bottom line at a faster rate," the analysts wrote. "Our dealer checks remain positive, with good retail sales and a very healthy Harley brand. The only spot of weakness we have found is in the New York area, with Long Island and New Jersey dealers reporting weakness in November. Even with this N.Y.-area weakness, we believe 4Q U.S. retail sales are tracking to be up 10 percent."
The Harley-Davidson 110th Anniversary Celebration event in Milwaukee will take place Thursday, Aug. 29, through Sunday, Sept. 1, 2013.
Events will include fan-organized rides to Milwaukee, a massive parade, three headlining concerts, parties at Milwaukee's Henry Maier Festival Park (Summerfest Grounds) and activities at the Harley-Davidson Museum. Talent, as well as ticket details for the three headlining concerts that will be hosted at the Marcus Amphitheater on the Summerfest Grounds, will be announced in early 2013.
For H.O.G. members, the event tickets include access to the global H.O.G. 30th Anniversary Celebration on Aug. 29 at the Summerfest Grounds, as well as access to members-only areas throughout the weekend's events. Additional free public activities include parties at participating Harley-Davidson dealerships and street parties around the city.