HOG - Harley-Davidson is tipped by CFRA to keep rolling higher

CFRA walked away from the Harley-Davidson ( NYSE: HOG ) earnings report with increased confidence on the motorcycle stock.

Analyst Garrett Nelson thinks high auto prices and elevated gas prices will continue to drive some consumers to the motorcycle market. "We see HOG continuing to struggle with declining sales volumes largely due to aging customer demographics and a rising mix of sales in lower-margin international markets, but HOG continues to generate strong free cash flow due to its low capex."

In terms of capital allocation for investors, HOG is noted to pay a dividend of $0.63 per share and increased share repurchases in 2022.

Nelson and team expect Harley's revenue to increase roughly 5% in 2023 and 4% in 2024, after increases of 3.9% in 2022 and 16.9% in 2021, driven by higher price realizations. On the profit line, CFRA forecasts adjusted EPS of $4.95 in 2023 and $5.25 in 2024, versus $4.96 in 2022 and $4.19 in 2021. CFRA's 12-month target on HOG of $58 is based on a 11.0X multiple to the 2024 EPS estimate, a discount to HOG's five-year mean forward P/E of 14.4X. The firm believes a discount is warranted given the secular decline in global motorcycle sales volumes, which for HOG peaked in 2006.

Shares of HOG are up 44% over the last 52 weeks.

The Seeking Alpha Quant Rating on HOG is Hold.

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