Harley-Davidson Might Have Sputtered In Q3

Wunderlich’s Rommel Dionisio expects Harley-Davidson Inc HOG to report “relatively sluggish” retail sales trends when the company reports it Q3 results.

Dionisio maintains a Hold rating on the company with a price target of $52.

Encouraging Checks

The analyst mentioned, however, that “with a broad slate of new product innovations unveiled to dealers recently, including the first major engine redesign in 18 years, recent dealer feedback we have received from our most recent channel checks have been encouraging.”

Dionisio expects Harley Davidson’s U.S. momentum to potentially improve over the next several months against the backdrop of a moderating competitive promotional environment.

Related Link: Jefferies Initiates Coverage On Harley-Davidson At Hold

The analyst stated that he could get more bullish on the stock if the company sees a rebound in its market share, along with improved industry sell-through trends.

Sluggish Q3 Trends

“With Harley's new model year 2017 (MY17) vehicles not arriving in dealerships until late Sept., HOG saw relatively sluggish retail sell-through trends in U.S. dealerships for most of the quarter, according to feedback from our proprietary channel checks,” Dionisio cautioned.

The analyst noted that the heavyweight motorcycle industry has been generally lackluster for most of 2016, although Harley Davidson’s market share had remained mostly stable, with the easing of competitive promotional pressures, as compared to a year ago.

New Product Cycle

“Harley completely overhauled its important Touring line for MY17 by introducing a complete redesign of its classic V-Twin engine, called the Milwaukee Eight,” according to the Wunderlich report.

This introduction represents the eight time that Harley Davidson has redesigned its VTwin motor in its 113-year history, and Dionisio believes this could possibly be the most significant powerplant launch since 1998.

Full ratings data available on Benzinga Pro.