BMO Capital Markets analyst Gerrick Johnson has provided Powersports Business with a research note ahead of the Harley-Davidson first quarter earnings call on Tuesday.
Johnson reports that BMO anticipates “anticipate that HOG's lifestyle will be an appealing form of therapeutic social distancing. However, with dealership operations reduced, unemployment rising, and asset prices dropping, we anticipate retail sales of Harley-Davidson motorcycles will decline significantly over the near term. We continue to rate the shares of HOG Market Perform with a revised target price of $20 from $37.”
Johnson adds that BMO is lowering its Harley-Davidson Q1 retail sales estimate to a decline of 14 percent (-10 percent U.S.; -20 percent international) from a gain of 0.5 percent (-1.5 percent U.S.; 3.2 percent international).
Johnson goes on to write: “While we are reducing our retail, revenue, and earnings estimates for HOG, we are now more optimistic about the outlook for the company over the long term than we had been before. HOG recently announced that it has parted ways with CEO Matt Levatich and COO Michelle Kumbier. We think new leadership was long overdue. Board member Jochen Zeitz, best known as the former long-time CEO of Puma, will be acting CEO while HOG searches for a permanent replacement. This will be the first earnings call for Mr. Zeitz as CEO, and we look forward to hearing what he has to say.
“We think strategies initiated by prior management were
appropriate — building new riders and extending the brand into middleweight
categories makes sense — but we lacked confidence in management's ability to
execute. We are hopeful HOG brings on new management that can achieve these
“We think current social distancing mandates,
and the resultant popularity of outdoor activities, present an opportunity for
HOG to promote its its products and brand. Harley-Davidson is synonymous with
personal freedom and the open road, making it well-suited for the current