Citi Expects Harley-Davidson's Q4 To Impress In View Of July Financing Promotions

Citi’s latest survey across 30 dealers of Harley-Davidson Inc HOG suggests the MY17 Touring models have been quite impactful and were likely to drive incremental sales through the next 12 months.

Citi’s Gregory R. Badishkanian maintains a Buy rating on the company, with a price target of $62.

Stock Catalysts

“While it's still early days, we think the potential lift in retail sales (beginning in 4Q16) combined with the negative investor sentiment could set up HOG stock for a favorable risk / reward in 2H16,” Badishkanian mentioned.

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The analyst does not expect any major catalysts for the stock in Q3 given that the dealer check indicate that July/August retail sales were likely to be very different from the year-on-year trends seen in Q2.

“However, we think the stock could react favorably when HOG reports 4Q results, which will have a full quarter of new product sales,” Badishkanian stated.

The analyst believes September could be critical in determining whether Harley Davidson is on track to witness an acceleration in retail sales.

September Outlook

The company ran attractive financing promotions through July for its Touring segment, which seems to have appealed to the more “value-conscious” consumer.

“Overall, our dealer checks suggest there probably wasn't a significant change in July/Aug US retail sales vs the 2Q YoY trend, but September could see some pick-up depending on timing of shipments of new products,” Badishkanian noted.

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