HOG - Baird trims estimates for Harley-Davidson amid supply chain problems

Checks with dealers reflected a significant sales slowdown for Harley Davidson ( NYSE: HOG ) as inventory remains low, causing Baird to cut expectations for the motorcycle manufacturer.

In a note to clients on Friday, equity analyst Craig Kennison advised that all dealers contacted said inventory was too lean. Coupled with inflation impacts and elevated concerns of a looming recession, Kennison reported that many dealers are quick to voice frustration with the current selling environment.

“Our checks suggest substantial declines in U.S. retail (percentage decline in the 20s), primarily due to product availability (exacerbated by the temporary shutdown),” he told clients. “We see

good value but concede that valuation is often a poor trading signal, as we continue to

note several economic red flags (war, oil, inflation, Fed policy) and believe alpha may

come easier after economic fears abate.”

Given this expectation, Kennison cut his full year EPS estimates for 2022 and 2023 to $4.30 and $4.45 respectively. The latter figure is well below the analyst consensus that now stands at $4.72.

To be sure, Kennison retained an “Outperform” rating and a $55 price target, suggesting significant long–term upside. However, he assessed the stock as “high risk” at the present moment and advised a clearer entry point is likely to emerge after economic fears peak.

Read more on D.A. Davidson’s similarly pessimistic projections for the second quarter report due in about two weeks .

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