Harley-Davidson (HOG) slips 0.55% premarket after Wedbush downgrades the stock to Neutral from Market Perform citing mediocre channel checks as wet weather hit the motorcycle industry in Q2. FY13 EPS estimate is cut to $3.30 from $3.40.I've been thinking that motorcycle sales have probably not been great this quarter for precisely this reason. But then, I screw up and think "Well, that's just the weather here. Could be different elsewhere." Then I screw up and listen to the weatherman who insists we're having a drought. Anyway, if my "gut instinct" means anything at all, I might expect an even worse EPS than $3.30 simply because a Harley is quite an investment, and given that the riding season is about half over, depending on where you live of course, I don't think sales will pick up much for the rest of the year. I haven't actually figured any new price target, and I'm thinking that this won't result in any kind of significant change to my 1 year price target of $60. Part of the reasoning for that is that next year, weather permitting and assuming that Harley sales have been slow this year because of rain, we might expect some pent-up demand for motorcycles. However, given that the stock is now $2 over my previous fair value estimate, I wouldn't be jumping in to HOG just yet.
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