Harley Davidson shares are down 11% YTD. Should I invest?

Harley-Davidson, Inc. (NYSE: HOG) shares have weakened from $37.8 to $32.13 since the beginning of January 2022, and the current price stands at $33.74. 

Harley Davidson reported better than expected third-quarter results, and for the full fiscal year, its management expects Motorcycles segment revenue growth to be above 30%.

Outlook remains positive

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Harley Davidson is a stable company, its business continues to perform well, but shares of this company have weakened more than 10% since the beginning of the year.

Harley-Davidson reported strong third fiscal quarter results in October 2021; total revenue has increased by 20.3% Y/Y to $1.16 billion, $10 million above expectations, while the GAAP earnings per share were $1.05 (beats by $0.37).

Revenue for the nine months of 2021 was $4.3 billion, which is 30% above 2020 (the same period), while the company’s management expects Motorcycles segment revenue growth to be above 30% for the full fiscal year.

Operating income for the nine months of 2021 was $831 million, and the positive information is that the US and the European Union ended a steel and aluminum tariffs dispute.

Bank of America has a positive view for the shares of Harley Davidson and reported that Harley is “very pleased” with the motorcycle division’s margin performance and sees strength with the financial services division.

Bank of America continues to keep a buy rating on Harley-Davidson shares with a $70 target price which implies more than 100% upside potential. Bank of America added:

Green shoots seen for Harley-Davidson into 2022 include continued high used motorcycle prices, a very healthy and profitable dealer system, and an enhanced opportunity for the company to develop lifestyle brand sales.

Harley-Davidson has a strong position in the market; the company continues to pay a dividend and improve its business for long-term growth and advantage.

The current dividend yield stands around 1.7%, Harley-Davidson trades at less than six times TTM EBITDA, and this company could deliver substantial shareholder value for many years to come.

$30 represents strong support

Harley-Davidson’s stock price has fallen more than 30% after reaching the highest level in 2021 of $52.06 on May 18, but despite this, shares of this company could provide strong returns for long-term investors.

If the price falls in the upcoming period, every price in a range from $20 to $30 could be a very good opportunity to invest in Harley-Davidson stock.

Summary

Harley-Davidson shares have weakened more than 10% since the beginning of January 2022, but despite this, shares of this company could provide strong returns for long-term investors. Bank of America keeps a buy rating on Harley-Davidson shares with a $70 target price which implies more than 100% upside potential.

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