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Harley Rolls Out Ho-Hum New Lineup; Death Of The V-Rod

Harley Rolls Out Ho-Hum New Lineup; Death Of The V-Rod
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Get your motor running.

As expected, Harley-Davidson Inc (NYSE: HOG) is rolling out its 2018 lineup by expanding the number of bikes sporting only its third new Big Twin engine in 80 years, the most powerful motor in the company’s history.

The struggling motorcycle company, looking to grab millennials, is also cutting down on the chrome that some older aficionados love, offering almost Goth-like, muted hues and essentially standardizing the basic platforms of its biggest line of bikes.

Considering how well the new engine did when it was introduced into the touring lineup in fiscal year 2016, it’s not surprising that UBS analyst Robin M. Farley rated the stock at Neutral, with a price target of $47. Harley was trading at $47.21, fairly flat, at time of publication.

Related Link: Harley Dealer Survey Shows Tepid Sales

Bye Bye V-Rod

Sadly, the company dispatched the fastest and most sophisticated model in its lineup, the V-Rod, a liquid-cooled look into the future that was appreciated by non-Harley fans but rejected, downright hated, by the aging loyalists to the iconic brand.

By using essentially the same frame and motor for all of its high-end, high-profit big bikes, Harley further homogenizes its lineup.

“HOG reduced the total number of models in the line-up to 31 from 36 last August — which improves manufacturing efficiency and helps reduce dealer inventory when sales are declining,” Farley wrote in an analyst note.

Even Last Year Was Better

Harley introduced its new, ballyhooed “Milwaukee 8” engine in FY17 only on its fully kitted-out touring bikes. The amount of effort put into the new engine made its spread elsewhere in the Big Twin lineup inevitable, but Farley noted some diminishing returns for Harley.

“We believe these intros for model year '18 will be less impactful than model year '17 Touring intro because the Touring rider is HOG's core customer — the consumer who is most likely to upgrade to the new engine,” the analyst noted. “This model year lineup may not be enough to reverse Harley's US retail sales declines, now in their third consecutive year.”

Farley says Harley should have diversified its lineup, perhaps introducing the scrambler type bikes that are affordable hot sellers for Italy's Ducati and England's Triumph. Fleshing out the so-called street "hooligan" category also might have attracted a new demo.

As the noted Harley-booster-in-chief might say: So sad.

Latest Ratings for HOG

Oct 2017ArgusUpgradesHoldBuy
Aug 2017KeyBancReinstatesSector Weight
Aug 2017Aegis CapitalInitiates Coverage OnHold

View More Analyst Ratings for HOG
View the Latest Analyst Ratings

Posted-In: Big Twin engineAnalyst Color News Price Target Reiteration Travel Analyst Ratings General Best of Benzinga


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