Harley-Davidson, Inc. (NYSE: HOG) shares have advanced from $36.99 above $52 since the beginning of January 2021, and the current price stands around $47. Citigroup has an optimistic outlook on Harley given the strong consumer rebound from the pandemic, while Bank of America sees this company as a top SMID cap idea.
Fundamental analysis: Citigroup assigned a buy rating on Harley with a $55 price target
Harley-Davidson has a very good position in the market, and with more deployment of the vaccines, the company’s management expects that demand for motorcycles will continue to grow. The company’s outlook remains stable, and Citigroup assigned a buy rating on Harley with a $55 price target.
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Bank of America also has a positive view of Harley and sees this company as a top SMID cap idea that should have market share gains in the U.S. and Europe. Harley Davidson reported that it would defend its position in Europe and continue to fight against challenging EU tariffs.
“We are encouraged by the announcement that tariffs affecting our products will not escalate from 31% to 56%. European motorcycles only pay up to 2.4% to be imported into the U.S. We want free and fair trade,†said Jochen Zeitz, CEO of Harley Davidson.
Harley Davidson’s first-quarter results were in line with the recovery in economic activity; total revenue has increased by 9.2% Y/Y to $1.42 billion while GAAP EPS for the same period was $1.68 (beats by $0.79). The company’s management raised the 2021 fiscal year guidance, and according to estimates, motorcycles segment revenue growth should be 30 to 35 percent.
The current dividend yield stands around 1.27%, and it is important to mention that the board of directors declared a $0.15/quarterly share dividend last month (in line with the previous).
Technically looking, Harley Davidson shares could advance above the current price levels in July 2021, but the risk/reward ratio is not good enough for “value†investors. The book value per share less than $13, and if we compare the total stockholders’ equity of $1.97 billion and the market capitalization of $7.27 billion, we can notice that this stock is not undervalued.
Technical analysis: $40 represents a very strong support level
If the price jumps above $50, it would be a signal to trade shares, and the next target could be around $52. Rising above $55 supports the continuation of the bullish trend for Harley Davidson shares, but if the price falls below $40, it would be a strong “sell†signal.
Summary
Harley Davidson is in a good position to grow its business, and Citigroup assigned a buy rating on Harley with a $55 price target. Rising above $55 supports the continuation of the bullish trend for Harley Davidson shares, but if the price falls below $40, it would be a strong “sell†signal.
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