CFRA distanced itself from Harley-Davidson (NYSE: PIG) earnings report with increased confidence in motorcycle stocks.
Analyst Garrett Nelson believes that high car prices and higher fuel prices will continue to lead some consumers to motorcycle market. “We see HOG continuing to struggle with declining sales volume largely due to aging customer demographics and a growing mix of sales in lower margin international markets, but HOG continues to generate strong free cash flow due to low capex.”
In terms of capital distribution to investors, it said HOG will pay a dividend of $0.63 per share and increase share buybacks in 2022.
Nelson and the team expect Harley’s revenue to increase roughly 5% in 2023 and 4% in 2024, following increases of 3.9% in 2022 and 16.9% in 2021, driven by higher price realization. On the profit line, CFRA forecasts adjusted EPS of $4.95 in 2023 and $5.25 in 2024, up from $4.96 in 2022 and $4.19 in 2021. CFRA’s 12- the monthly target on HOG of $58 is based on an 11.0X multiple to 2024 EPS estimates, a discount to HOG’s five-year median P/E of 14.4X. The company believes the discount is justified given the secular decline in global motorcycle sales, which peaked for HOG in 2006.
HOG shares are up 44% over the past 52 weeks.
Looking for Alpha Quant Rating on HOG is Hold.