Harley-Davison Is A Short At $30
Harley-Davidson is has been having issues with adapting to today’s times. For the past several years, Harley Davidson hasn’t been able to attract younger customers. Harley-Davidson still is a Baby Boomer iconic brand, with the median age of a motorcycle owner being 47 (just 11 years earlier the median age was 40).
Over the years Harley-Davis has been stuck right in the middle of the trade tariff. Back in 2017 when President Trump withdrew the U.S. from the Trans-Pacific Partnership, a free-trade agreement, that May of 2017, Harley-Davidson announced they were building a plant in Thailand to avoid the country's tariff of up to 60 percent on imported motorcycles and to help the company get tax breaks when exporting to nearby countries.
In 2018 when the EU retaliated and placed their own tariffs on certain manufactured goods, including motorcycles, in response to new US taxes on imported metal, Harley-Davidson said it was shifting production of motorcycles for EU destinations from the US to international facilities.
Now Harley-Davidson has been trying. In an attempt to start turning things around for the long haul by attracting a new generation of riders, Harley-Davidson introduced its first electric motorcycle, the LiveWire, last year. The electric bike is quiet, goes from 0 to 60 mph in 3.5 seconds, has no clutch and has a range of about 100 miles between charges. The company called LiveWire and electric vehicles “the future of Harley-Davidson,” but the company has to get through the present first.
Motorcycle maker Harley-Davidson trades as if its declining sales will never recover, says Citigroup analyst Shawn Collins. But Harley’s cheap valuation and its new chief executive make the stock a good bet, Collins says in a Monday report that initiates coverage of the stock with a Buy rating.
The Citi analyst thinks Harley stock (ticker: HOG) can rise more than 30% to $33, from its Monday morning level of $25. If margins return to their historic peak, the shares might even see $40, Collins says.
”[W]e find the risk/reward compelling that a turnaround can take place at Harley-Davidson,” Collins writes. “At current valuation levels, Harley does not need to gain significant market share or grow new lines of business in order reward an investor.”
Wedbush analyst James Hardiman share’s Citi’s sentiment and has a $27 price target on Harley-Davison price. target on the stock to $27 on Tuesday. During their first quarter earnings report, Harley-Davidson said it was developing a new five-year strategic plan that would refocus priorities on core areas of strength, like its bestselling bikes and dealerships.
Upgrading Harley-Davidson's stock is an opportunity to get short the stock. If you think about it, you need buyers to step in to bid up price, which will create the opportunity to short the stock at the daily supply at $30. This is how Wallstreet works, once we know the rules of the game...it puts us in a position to win.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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