BofA Initiates Bullish Coverage Of Harley-Davidson: Here's Why

Harley-Davidson Inc’s HOG stock is poised to trade at a premium to its historical multiple, given 2021 earnings upside and accelerating brand momentum, according to BofA Securities.

The Harley-Davidson Analyst: Robert Ohmes initiated coverage of Harley-Davidson with a Buy rating and a price target of $55.

The Harley-Davidson Thesis: There is upside potential to the company’s 2021 earnings from “new model dealer restocking and favorable Financial Services segment (HDFS) outlook,” Ohmes said in the initiation note.

He added that Harley-Davidson’s brand momentum was “supported by a reset to a 'Pull' market strategy (under new CEO Jochen Zeitz) and HOG’s highly anticipated launch into Adventure Touring (Pan America 1250 available at dealers in May).”

The success of LiveWire in 2020 and the establishment of a dedicated electric vehicle division have forged the company’s leadership in electric motorcycles, the analyst noted.

As additional factors supporting the bullish rating, Ohmes further cited “the LT opportunities for motorcycle division EBIT margin recovery to peak 15%+ (vs. 2021 guidance of 5-7%) and stronger International growth (incl. China).”

He named Harley-Davidson as a top pick in the SMID (small and mid) capitalization segment.

HOG Price Action: Shares of Harley-Davidson had risen by 3.89% to $42.56 at the time of publication Wednesday.

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