Harley Investors' Ride Gets Rougher as Sales Obstacles Pile Up
(Bloomberg) -- The hits just keep coming for Harley-Davidson Inc., whose shares are headed for their biggest weekly decline since mid-March.
The motorcycle maker had already been rolling downhill fast this year as a deepening slump in U.S. demand spurred job cuts and a plant closure after the company projected global sales will drop as much as 4.9 percent in 2018 after last year’s 6.7 percent decline. The stock was crushed again during this holiday-shortened week as the latest salvos in the global trade war and used-bike pricing trends that Wedbush Securities Inc. called “a major problem for Harley-Davidson” rattled investors.
Harley’s stock fell as much as 2.4 percent Friday, following Thursday’s 2.2 percent decline. It was down more than 5 percent for the week. The slump, which came as the S&P 500 Index was on pace for a weekly gain, pushed shares below the 50-day moving average, a level that they had broken above two weeks ago for the first time since a post-earnings selloff in January.
This week’s selling was triggered by the European Union’s announcement that it would impose tariffs against U.S. imports in retaliation for new American duties, which it has indicated will target consumer, agricultural and steel products. Harley-Davidson said in a statement that a “punitive, retaliatory tariff” on its bikes would have a “significant impact” on its sales, dealers, suppliers and customers.
Wedbush’s cautious comments didn’t help things Friday. Analysts including James Hardiman said in a research note that the price deterioration they found in their latest analysis of the used-motorcycle market “appears to be less a function of supply and more a function of demand, which is more difficult to address.” They rate Harley neutral with a price target of $44, which is the second-lowest on Wall Street.
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