On Thursday, DA Davidson showed a positive stance on Harley-Davidson (NYSE:HOG) by increasing the motorcycle manufacturer's price target to $49.00, up from the previous $42.00, while reiterating a Buy rating for the stock. The firm's analyst highlighted the continuation of retail momentum for Harley-Davidson from February through March as a key reason for the updated target.
The analyst expressed a conservative stance on the company's earnings expectations for the first quarter of 2024, setting them at $1.40, which is slightly below the consensus of $1.53. Despite this cautious forecast, there is a heightened confidence in the potential for Harley-Davidson's U.S. retail sales to surpass expectations in the first quarter and provide insightful commentary for the full fiscal year 2024.
The new price target of $49 is derived from a sum-of-the-parts (SOTP) valuation approach. This method involves applying an 11.0 times price-to-earnings (P/E) multiple to the projected 2025 earnings of Harley-Davidson Motor Company (HDMC) and a 7.0 times P/E multiple to the anticipated 2025 earnings of Harley-Davidson Financial Services (HDFS).
Harley-Davidson's performance and the analyst's updated valuation suggest a positive outlook for the company's future. The analyst's report provides investors with updated guidance ahead of Harley-Davidson's first-quarter earnings release for 2024.
InvestingPro Insights
Harley-Davidson's (NYSE:HOG) recent stock performance and financial metrics provide a multifaceted view of the company's current standing. According to InvestingPro, Harley-Davidson has a market capitalization of $5.56 billion and is trading at a compelling earnings multiple, with a P/E ratio of 8.36 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at 7.87. This valuation suggests the stock may be undervalued relative to earnings, which is supported by an InvestingPro Tip highlighting the stock's low earnings multiple.
InvestingPro Tips also reveal that management's aggressive share buyback strategy could be a sign of confidence in the company's value, and with a dividend yield of 1.6% as of the latest data, the company has not only raised its dividend for 3 consecutive years but has also maintained dividend payments for 32 consecutive years. This demonstrates a commitment to returning value to shareholders. Furthermore, the company's liquid assets exceed short-term obligations, indicating a strong liquidity position.
For those seeking further insights, there are additional InvestingPro Tips available for Harley-Davidson, offering deeper analysis for investors. To explore these tips and enhance your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/HOG.
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