Wells Fargo Upgrades Harley-Davidson (HOG) to Outperform; Investors Not Fully Appreciating Shares
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Wells Fargo upgrades Harley-Davidson, Inc. (NYSE: HOG) to Outperform. Valuation range increased from $19-21 to $30-$32
Wells analyst says, "Upgrading HOG shares to Outperform on our belief that investors are yet to fully appreciate (1) a likely YE'09 supply/demand gap that should allow for low single-digits '10/'11 shipment growth and 1H10 stabilizing used bike prices, (2) benefits of a still evolving lower operating cost structure, (3) positively skewed HDFS profit profile, and (4) likely resumption of share repurchase w/ excess free cash flow. While shares are up ~ 3 fold from their March ’09 lows, we believe investor uncertainty related to (1) channel inventories, (2) new cost structure (including York), (3) HDFS recovery, is evident in the Street ’10 EPS est. range of $0.86-$1.85 and short interest at 17.5% of the float on 9.30.09. Raising '10 EPS est. to $1.44 (from $1.32) on improved shipment outlook and costs. Initiating '11 EPS est. of $2.12 (consensus $1.51). Current valuation of 11.6x P/E and 7.7x EV/EBITDA to our '11 ests. is 17% below and at the respective historical low end of average ranges for these metrics. "
To see more analyst ratings on HOG Click Here.
Harley-Davidson, Inc., through its subsidiaries, produces heavyweight motorcycles, as well as offers motorcycle parts, accessories, and related services.
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