William Blair Reiterates Outperform On Harley-Davidson Following Q&A With Management

In a research report published yesterday, William Blair analyst Sharon Zackfia reiterated an Outperform rating on Harley-davidson (NYSE:HOG), following a Q&A period with HOG’s executive management team. No price target was provided.

Zackfia wrote, “Domestic demand for the Street appears healthy, with the New York dealer indicating demand is outstripping supply at this early juncture, with particularly healthy conversion among young adults. While management did not comment as to whether Sportster sales have begun to rebound in the wake of the Street debut, the NYC dealer indicated his belief that Street customers would likely upgrade to more expensive bikes within a year or two of purchase.” The analyst added, “Model year 2015 features seven new bikes, including the return of the Road Glide, which was out of production for roughly a year and accounts for 10% of Harley’s domestic retail sales. The introduction of model year 2015 occurs as the company laps a tremendous response to model year 2014, which featured eight new Rushmore bikes and stimulated a 20% increase in domestic retail sales in the third quarter of last year.”

Zackfia continued, “We continue to like Harley shares, at 14 times our 2015 EPS estimate, particularly as we see the potential for domestic retail sales trends to rebound as comparisons ease after this quarter and the company laps tough winter and spring weather. Moreover, we continue to believe the longer-term story on demographic and international expansion remain key tailwinds, with a return to mid-20% operating margins possible over the next two years (versus 21.9% in 2013).”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Sharon Zackfia has a total average return of 16.9% and a 66.7% success rate. Zackfia has a 7.8% average return when recommending HOG, and is ranked #433 out of 3304 analysts.

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