On Monday, UBS reaffirmed its Neutral rating on Harley-Davidson (NYSE:HOG), accompanied by a steady price target of $39.00. The firm's perspective follows recent feedback from a collection of Harley dealers prior to the company's first-quarter financial results.
Harley-Davidson's retail growth in the first quarter was attributed to the company's strategic incentives and promotions, particularly for models not in the current year's lineup. While February saw an estimated 20% increase in U.S. retail sales, the impact of new Touring models and corresponding promotions remains a factor under observation.
The firm noted that the true influence of the new Touring models on Harley-Davidson's long-term retail trend, which has seen a 5% compound annual decline since 2006, might not become apparent until later in the spring season. However, the strong retail performance in the first quarter is anticipated to be highlighted by Harley-Davidson as evidence of demand for these new models.
Despite the positive quarter, UBS indicated potential risks associated with the strategy of clearing inventory for older models. The concern is that this approach may have accelerated purchases that would typically occur later in the spring, as some promotions were initially set to conclude on March 31.
Harley-Davidson's stock performance is expected to respond to retail trends, and the first-quarter retail strength will likely play a role in the company's narrative regarding consumer demand for its latest offerings. The full impact of the new Touring models on the company's retail trajectory will continue to be a topic of interest for investors and analysts alike.
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