Stay Clear of Harley-Davidson (HOG) into Earnings - Wedbush

Wedbush analyst, James Hardiman, performed a round of channel checks for Harley-Davidson (NYSE: HOG) and believes registrations are down 2% y/y. Reducing price target to $46 from $48 on a lower multiple, no changes to estimates or the Neutral rating.

Based on recent channel checks of more than 40 dealers, 4Q15 U.S. registrations appear to be down ~2%. This consisted of an October decline of ~3%, a flattish November and a ~4% decline in December. While this represents a slight improvement from the reported 2.5% decline in 3Q15, it is also up against a much easier comp of -2% vs. the prior +3%.

November was the best month of the quarter among our contacts, and clearly benefited from seasonally warmer weather. This helped to offset a growing availability of attractive competing models (specifically Indian Scout) and a heightened promotional environment.

New bike inventory levels were fairly lean as of year-end 2015. There are still a few too many 2015’s on dealer floors, as dealers are anxious to get more 2016’s into inventory. Dealers also continue to complain of elevated levels of used bikes, leading to across the-board price pressure and an overall drag on new bike sales.

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 $45.29 yesterday.

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