Harley-Davidson 2015 Estimates Cut By Wedbush, But 2016 Figures Raised

In a report published Monday, Wedbush analyst James Hardiman maintained a Neutral rating and price target of $57 on Harley-Davidson Inc (NYSE: HOG). The company is expected to revise its guidance down for the second consecutive quarter, following the lackluster retail results for Q2.

Dealer checks suggest that reported registrations for June rose 3 percent, with 4 percent growth in retail sales to customers, offset by a 1 percent decline in sales to dealers, as compared to the same quarter last year.

Overall, the analyst believes that Q2 reported sales were flat, or up 3 percent, on an apples-to-apples basis, below the estimate and the consensus. However, "buy-side sentiment seems to have factored in a flat-to-down 2Q retail scenario," Hardiman stated.

The analyst believes that if Harley-Davidson is able to achieve the Q2 retail/wholesale estimates, the company would need to attain retail growth of 7.5 percent in the latter half of the year to be able to reach the low end of the guidance range.

"While this is far from impossible, we believe the prudent thing would be to again cut the full-year guide, especially as this would the first shipment number explicitly backed by new-CEO Matt Levatich," the Wedbush report said.

The 2015 EPS estimate has been lowered by $0.03 to $3.88, including a reduction of the retail/wholesale estimate by $0.05, along with $0.02 benefit from the company's accelerated share buyback.

The 2016 EPS estimate has, however, been raised by $0.25 to $4.64. "This consists of a $0.35 increase in EPS due to a lower share count following the accelerated share repurchase during 2H15 offset somewhat by $0.10 of lower fundamental performance stemming from slightly lower retail sales and margin expectations," Hardiman added.