Harley-Davidson (HOG) Dealers Love the New 'Milwaukee-Eight' Engine - BMO

September 8, 2016 8:44 AM EDT
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Price: $58.10 -0.22%

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BMO Capital analyst Gerrick Johnson reiterated his Outperform rating and $66 price target on Harley-Davidson (NYSE: HOG) following "extremely positive" dealer feedback following the recently introduced 2017 motorcycle models.

"Our dealer contacts were unanimous in their praise of the new Milwaukee-Eight engine, the centerpiece of the 2017 model year introductions," Johnson notes. "Dealers note the superior power and noticeably better performance, particularly in conjunction with a suspension change in touring models. Dealers view the Milwaukee-Eight engine as a huge step forward for Harley while staying close to its roots."

While positive, Johnson notes they are still waiting for customer reaction. "At the outset, HOG's new 2017 model lineup seemed to be generating more customer curiosity than sales, although dealers note a more favorable response from customers once they completed a demo ride. Dealers are also reporting significant increases in demo rides, which is leading to an uptick in sales. While sales are good and we are encouraged, we are not surprised they are not better, as Harley riders are sometimes hesitant to be the first to buy new, unproven product. We believe there is significant pent-up demand for these new models, and we expect the release of this demand to occur at a measured pace, accelerating into 4Q and 2017 once the Milwaukee-Eight motorcycles spend more time (ideally problem-free) on the road."

For an analyst ratings summary and ratings history on Harley-Davidson click here. For more ratings news on Harley-Davidson click here.

Shares of Harley-Davidson closed at $52.71 yesterday.

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