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Stock Strategist

Harley Stops Its Slide

Market share losses abate in its latest quarter.

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Wide-moat  Harley-Davidson's (HOG) premium brand and positioning have given the company some stability after four quarters of declining domestic share: Share losses did not persist into the most recent quarter as the wide-moat firm harnessed demand by better targeting consumers.

Our forecast had already factored in the persistence of competitive discounting and incremental cyclical pressures, particularly from consumers afflicted by lower employment across the oil-producing regions domestically. Our 2016 forecast incorporates shipments of 265,000 (just below the company's guidance for around 270,000 units) and pricing declines of 1% as lower-priced Street models weigh on the ability to raise average selling prices. Longer term, we see unit growth of 2%-4% and pricing growth around 2% as Harley stands to benefit from new model demand and international growth thanks to a larger dealer network.

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Jaime Katz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.