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Goldman Sachs Believes Harley-Davidson Investors Were Positioned For A Larger Miss

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Goldman Sachs Believes Harley-Davidson Investors Were Positioned For A Larger Miss
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Harley-Davidson Inc (NYSE: HOG) reported a 2Q16 EPS beat, but announced disappointing forward shipment guidance. Goldman Sachs’ Patrick Archambault maintained a Neutral rating and $47 price target for the company, while reducing the estimates.

The EPS estimates for 2016, 2017 and 2018 have been reduced from $3.96 to $3.84, from $4.39 to $4.14 and from $4.90 to $4.61, respectively, citing lower global shipments, lower gross margins, and a higher share count.

Shares Respond Positively

Harley-Davidson’s shares rose 0.8 percent, versus a 0.2 percent gain in the S&P500, after the company reported its earnings ahead of expectations.

Related Link: Harley-Davidson Challenges May Persist For A While, Barclays Downgrades

The beat was “driven by higher-than-guided shipments to fill the dealer channel ahead of an ERP implementation and plant shutdown at Kansas City, in addition to a booked $9mn gain from the sale of HDFS receivables,” analyst Patrick Archambault mentioned.

Harley-Davidson’s shares climbed, despite the disappointing forward shipment guidance, as investors had expected a larger miss in view of the sluggish US retail environment, Archambault commented. He expects the US retail environment to continue to be lackluster in the near term due to “continued headwinds in oil-dependent areas and geopolitical uncertainty.”

The company also reduced its operating profit margin guidance from 16-17 percent to 15-16 percent. The analyst added that SG&A expenses would likely rose y/y, and operating profits may hit the bottom of the company’s guidance range.

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Latest Ratings for HOG

DateFirmActionFromTo
Nov 2016Northcoast ResearchInitiates Coverage OnNeutral
Nov 2016RBC CapitalUpgradesUnderperformSector Perform
Oct 2016RBC CapitalMaintainsUnderperform

View More Analyst Ratings for HOG
View the Latest Analyst Ratings

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