Harley-Davidson's stock skids as global motorcycle shipments fall

By Steve Gelsi

Motorcycle icon beats analyst estimates, but shares fall by 15.4%

Harley-Davidson Inc.'s stock fell more than 15% on Thursday after the company said its motorcycle sales fell and its margins narrowed.

Investors brushed aside first-quarter profit and revenue at Harley-Davidson (HOG) that topped analyst estimates.

The company said its first-quarter global motorcycle shipments dropped by 7%, in line with its prior expectations.

The drop in revenue was fueled by a decrease in wholesale shipments and lower global pricing, the company said.

Operating margin fell to 16.2% in the first quarter from 21.6% in the year-ago period.

Harley's net income for the three months that ended March 31 dropped to $234.94 million, or $1.72 a share, from $304.09 million, or $2.04 a share, in the year-ago quarter.

The Milwaukee-based manufacturer delivered a solid beat over the FactSet consensus estimate of $1.51 a share.

First-quarter revenue dipped to $1.48 billion from $1.56 billion in the year-ago period but came in ahead of the analyst estimate of $1.35 billion.

Wall Street was not impressed even though Harley-Davidson cited 6% retail growth in North American sales and said it was "pleased" with the reception to its new Touring product line.

Looking ahead, Harley-Davidson cut its estimated 2024 operating loss for its LiveWire line of electric-powered motorcycles by $10 million, to a range of $105 million to $115 million.

For 2024, the company continues to expect its motorcycle division to generate revenue that will be flat to down 9% from the prior year, with operating-income margin of 12.6% to 13.6%.

CFRA analyst Garrett Nelson reiterated a hold rating on Harley-Davidson and hiked his 12-month price target by $5 to $40. The company's gross margin was narrower than expected, he said.

"With growing pressure on consumer discretionary spending, we think HOG's unchanged guidance despite a significantly better-than-expected Q1 reflects caution as it pertains to its motorcycle sales and margins for the balance of the year," Nelson said.

Harley-Davidson's stock has now fallen 9.7% in 2024, compared with a 5.8% increase by the S&P 500 SPX.

-Steve Gelsi

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04-25-24 1438ET

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