With Harley-Davidson Production, Sales Frozen, Argus Downshifts On Stock

Although shares of Harley-Davidson Inc HOG have significantly underperformed the S&P 500, the company has suspended production at most of its U.S. manufacturing facilities and shut its retail stores due to the coronavirus pandemic, according to Argus.

The Harley-Davidson Analyst

David Coleman downgraded Harley-Davidson from Buy to Hold.

The Harley-Davidson Thesis

While Harley-Davidson’s stock has lost around 59% over the past three months versus a 24% decline for the S&P 500, recent developments have been particularly disappointing, Coleman said in the Monday downgrade note. (See his track record here.)

The motorcycle manufacturer has withdrawn its 2020 guidance.

Argus lowered its adjusted earnings estimates for 2020 and 2021 from $3.52 per share to $3.07 per share and from $3.68 per share to $3.41 per share, respectively.

Harley-Davidson had witnessed a marginal improvement in sales in the fourth quarter, raising expectations of its strategic growth plan leading to a turnaround by the end of 2020, Coleman said. The company instead stopped production and closed its retail stores.

Although Harley-Davidson’s shares are trading near the bottom of their 52-week range, they are not attractively priced given the company’s substantial challenges, including the loss of production and sales due to the coronavirus, the analyst said.

HOG Price Action

Harley-Davidson shares were trading 5.47% higher at $15.82 at the time of publication Monday. 

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