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Harley-Davidson stock under pressure as Citi flags high inventory concerns

EditorEmilio Ghigini
Published 25-10-2024, 03:10 pm
HOG
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On Friday, Citi made adjustments to its outlook on Harley-Davidson (NYSE:HOG) stock, reducing the price target to $34 from the previous $39. Despite this change, the firm retained a Neutral rating on the motorcycle manufacturer's stock. The adjustment follows concerns regarding inventory levels and retail sales trends that may impact future performance.

The analyst at Citi expressed reservations about the company's trajectory towards 2025, citing several factors that dampen their confidence. High inventory levels, both from mathematical calculations and feedback from dealers, were highlighted as a primary concern. Additionally, a history of persistent retail sales declines was noted, with the year 2024 looking particularly troubling.

Harley-Davidson's ambitious margin targets were also mentioned as a potential issue, with the analyst suggesting that the company's financial expectations for 2025 and 2026 might be set too high. This outlook has led to a downward revision in both the firm's estimates and the price target for Harley-Davidson shares.

The report from Citi reflects a cautious stance on Harley-Davidson's financial health and market position. With the price target now sitting at $34, the firm's neutral stance remains unchanged, indicating a wait-and-see approach to the motorcycle giant's stock performance in the near term.

Investors and market watchers will likely monitor Harley-Davidson's inventory and sales figures closely, as these will be critical indicators of the company's ability to meet its financial targets and stabilize its market position in the coming years.

In other recent news, Harley-Davidson reported a challenging third quarter in 2024. The company faced significant global market headwinds, leading to a 13% drop in overall retail sales and a 26% decrease in consolidated revenue. The company's earnings per share also fell by 34% year-over-year to $0.91. Despite these challenges, Harley-Davidson's U.S. retail sales remained relatively stable, decreasing by only 1%, supported by nearly 10% growth in the touring segment.

The company has revised its full-year outlook and is implementing strategic actions to improve profitability and dealer support, focusing on reducing inventory and cost management. Harley-Davidson also plans to reduce dealer inventory by 20% by year-end. These are some of the recent developments for Harley-Davidson.

InvestingPro Insights

Recent data from InvestingPro adds depth to Citi's analysis of Harley-Davidson (HOG). The company's P/E ratio of 6.44 suggests it's trading at a low earnings multiple, which could be attractive to value investors despite the concerns raised. However, this should be viewed in the context of the stock's recent performance, with a 17.05% decline in the past month and a 12.59% drop in the last week alone.

InvestingPro Tips highlight that management has been aggressively buying back shares, which could be seen as a vote of confidence in the company's future. Additionally, Harley-Davidson has maintained dividend payments for 32 consecutive years, demonstrating a commitment to shareholder returns even in challenging times.

These insights align with the article's discussion on the company's financial health and market position. Investors considering Harley-Davidson might find value in exploring the additional 9 tips available on InvestingPro, which could provide further context to the company's current situation and future prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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