Harley-Davidson (HOG): Dealer Show Preview - UBS
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UBS analyst, Robin Farley, reiterated her Neutral rating on shares of Harley-Davidson (NYSE: HOG) a week before the annual dealer show. The analyst is expecting a possible redesign but more importantly model cuts that could simplify manufacturing processes and streamline production.
The analyst states "HOG may introduce a new engine that is 107 cubic inches (1753cc), a complete redesign with one cam and 4 valves per cylinder, a significant change from the current twin-cam engine that has two valves for each cylinder. So it could help inspire existing riders to upgrade. Also we expect a new Trike, which appeals to Harley's aging rider base, and possibly also a new Springer model. What Could Be Cut? Harley has 40+ models in its MY'16 line-up versus just 24 back in 2001, yet inventory levels are the same despite higher growth prospects in 2001. One way to reduce dealer inventory if you can't increase the retail sales rate is – reduce the number of models in the line-up. This would reduce what dealers overall would need to keep in stock on their floor, so that would help dealers and would also reduce the cost of carrying that inventory on the floor, an expense that HDFS often pays. And reducing the number of bikes in the model line-up could also reduce manufacturing complexity and improve efficiencies."
No change to the price target of $55.00
Shares of Harley-Davidson closed at $53.27 yesterday.
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