Analysts Differ on Harley-Davidson

Differing opinions is what makes a horse race, they say, and so it is with stock prices, too. Early this month, two leading analysts issued dramatically different opinions on the value of Harley-Davidson (HDI) common stock. However, the sellers seemed to outnumber the buyers by a wide margin.
Harley-Davidson stock was battered in large declines on heavy trading following a negative report from Banc of America Securities analyst Gary Cooper issued Oct. 5. Cooper downgraded Harley to Sell from Neutral, citing rising inventories and weak response to the 2006 lineup.
“We believe,” he wrote, “rising retail inventory, decelerating demand and lackluster response to 2006 model year bikes are likely to lead to a decline in wholesale unit shipments in (fiscal year) 2006.”
Harley stock dropped from an opening price Tuesday, Oct. 4, of $48.27 to $44.92 at the close of the market on Thursday, Oct. 6. Trading Oct. 5 was nearly 8 million shares, about four times the normal one-day volume. Thursday, it was 4.2 million shares. Over the last 52 weeks, Harley-Davidson stock has ranged from about $62 down to about $44.
On the other hand, Tim Conder, a respected analyst with A.G. Edwards, continued to rate Harley a Buy for aggressive investors in his report dated Oct. 6. Third quarter “U.S. Harley demand continues to accelerate,” writes Conder, “with third quarter sell through up 5%-7% vs. a decline of 9.8% comparison.” Dealers surveyed by Conder indicated “continued strength in mid/high end units; solid initial reception to new 2006 models, and very modest 2005 model inventory carryover.”

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