HARLEY-DAVIDSON saw a big increase in its share price this week, with stock in the American motorcycle maker 5.2% increase in value, almost overnight.
According to Citigroup analyst, Shawn Collins, the iconic motorcycle maker is trading as if its sales will never recover, although, with that low stock valuation and change at the head of the board, H-D has never looked better value.
Harley-Davidson FXDR video review
Part of the turnaround in fortunes is also down to new CEO Jochen Zeitz taking the helm of the 117-year-old company. With a refreshed sales strategy, a focus on its core customers, and Zeitz’ track record of success with the likes of Puma, the stock market and those that follow it seem to have faith in H-D’s new leader.
Collins believed that Harley stock can rise more than 30% to $33, from its Monday morning level of $25. If margins return to their peak, the shares might even see $40, Collins says.
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“We 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.”
Part of the Zeitz-appeal is the new CEO refreshing approach to marketing and new product development, skills that Collins believes are enough to help H-D to succeed once more.
That said, the change in fortunes won’t come easily to Harley-Davidson, as the U.S. market for large-engine bikes (H-D’s main product line) has fallen 50% since 2006. With an ever-increasing number of younger riders shunning the cruiser lifestyle, mostly in favour of more economical and exciting machines, it’s clear that some evolution is on the cards.
