Citi upgrades Harley-Davidson to 'buy', raises TP on 'intriguing' turnaround story

Citi now recommends buying shares of iconic motorcycle maker Harley-Davidson ahead of its upcoming third-quarter results. The stock may now offer a compelling entry point, Citi analyst James Hardiman argues. The company is gaining momentum after a multiyear slump, and the recovery looks set to continue.

Citi has upgraded Harley-Davidson stock from “neutral” to “buy,” while also raising its target price by 6.5% to $33 per share, CNBC reported. That implies 34% upside from Friday’s close. Following the upgrade, Harley-Davidson shares have gained 3.3% in premarket trading on Monday as of this writing. They are up 20% year to date.

The company’s recovery is gaining momentum after a multiyear sales slump that has sent Harley-Davidson stock down 41% since the end of 2022, Hardiman explains. He points to positive North American retail sales trends this year: sales rose 14% year over year to 23,800 motorcycles in the first quarter and increased 3% to 29,750 units in the second.

The strong momentum continued through July and August, while Citi’s latest checks suggest September retail sales may have risen by double digits, CNBC reported. “If accurate, Harley would be on pace to significantly outperform current expectations and exit the year with the strongest retail momentum it has seen in years,” Hardiman says.

When it reported second-quarter results, the management raised its full-year retail sales guidance to 133,500-138,500 motorcycles from 130,000-135,000. Citi believes that “now may be a compelling entry point ahead of third-quarter earnings/guidance,” Hardiman concludes. According to FactSet, Harley-Davidson is to report the quarterly results around October 28.

Wall Street is mostly neutral on the stock. According to MarketWatch data, it has 10 “hold” ratings versus five “buy” calls, while four analysts rate Harley “underweight” or “sell.” The average target price of $27.78 per share implies 13% upside from the last close.