Deutsche Bank Maintains a 'Buy' on Harley-Davidson (HOG), Raises Estimates & Price Target

October 16, 2009 8:06 AM EDT

Deutsche Bank maintains a 'Buy' rating on Harley-Davidson (NYSE: HOG), raising estimates and price target to $33 from $26.

Deutsche analyst says, "HOG's plans include: 1) Cutting cost - HOG is targeting an additional $120MM-$150MM of annual cost savings ($0.30-$0.39 per share) by 2014, including the restructuring and/or closing the HOG's York production facility; 2) Focusing the business on a defendable core – HOG will discontinue its loss making Buell and MV Agusta brands, and; 3) Pursuing growth off of that base - HOG will focus on growing its core brands in existing markets, and it will add 100-150 international dealerships...We are raising our 2009 and > 2010 estimates to $1.09 and $2.10 from $0.97 and $1.85, based on HOG’s short-term cost performance, elimination of Buell and MV Agusta losses, and better than expected retail volume. While Harley Davidson maintained its FY09 gross margin guidance of 30.5%-31.5%, this guidance now incorporates $50MM of non-recurring dealer inventory costs related to the Buell closure (a 120 bps dilutive impact), implying that underlying performance is better than expected."

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