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beat second-quarter earnings expectations, however bike and associated product gross sales have been decrease than anticipated. After initially rising in premarket buying and selling Wednesday, the inventory fell quick shortly after the market opened.
Harley-Davidson inventory (ticker: HOG) was down 6.8% to $40.82 in Wednesday morning buying and selling, whereas the
index was up 0.6%. The corporate reported adjusted earnings of $1.41 a share, topping consensus estimates at $1.21 a share. However gross sales in the important thing bikes and associated merchandise phase got here in at $1.33 billion, decrease than estimates of $1.39 billion.
Edward Jones analyst Brian Yarbrough instructed Barron’s through electronic mail that the majority of the earnings beat got here from Harley-Davidson’s monetary companies division. He thinks the phase will see headwinds within the coming quarters as stimulus and Covid-19 aid fades.
He did level out in a notice to shoppers that the corporate is promoting extra new bikes at full worth, whereas used bikes are seeing stronger pricing. Within the earnings launch, Harley-Davidson CEO
who’s now in his second 12 months in that function on the bike large, pointed to progress for the corporate’s turnaround plan, which is nicknamed “Hardwire.”
“We’re inspired by the indicators of client positivity available in the market; nonetheless, we stay conscious of the numerous provide chain challenges that we anticipate to proceed to influence the sector,” Zeitz stated within the earnings launch.
In a separate information launch, Harley-Davidson stated it launched within the U.S. a web-based platform for preowned bikes referred to as H-D1 Market. On it, customers should buy and promote bikes by the Harley-Davidson supplier community.
“The H-D1 Market platform will join our prospects, group and our robust supplier community, with the aim to change into the biggest market for preowned Harley-Davidson bikes in the USA,” Zeitz stated.
Raymond James analyst Joseph Altobello famous the corporate raised its 2021 outlook for bike division margins and monetary companies phase working revenue. Nonetheless, negotiations with the European Union associated to bike tariffs present some uncertainty for the agency.
Even with Wednesday morning’s drop, Harley inventory is up about 43% previously 12 months. Analysts are combined on what comes subsequent. Of the 17 analysts listed by FactSet, eight have Purchase or equal scores, whereas seven have Maintain or equal scores. Yarbrough has a Maintain ranking on the inventory.
“I feel the inventory is struggling as the corporate is seeing many types of inflation (uncooked supplies, transportation) and provide chain points that can constrain the second half,” Yarbrough added. “General, I simply assume folks stay involved concerning the lengthy -term demand developments for the model and thus the excessive brief curiosity ratio that may additionally influence the inventory worth.”
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