Wall Street gets motorcycle fever over Harley
Tuesday, 06 April 2010 | Written by Digits | Print | E-mail

HarleyIt was the good news Harley-Davidson could use and the positive outlook some say the Milwaukee motorcycle manufacturer needed.

The stocks of the legendary motorcycle company experienced their highest surge in over two years thanks to the confidence of a financial analyst.

RBC analyst Edward Aaron increased his share price prediction to $36 from $32 and the rest of the market took notice. Writing a report called “High on the Hog," Aaron forecasts improved motorcycle sales for the Milwaukee Company in coming months.

Harley shares rose $1.78, or 6.2 percent, to $30.16 by midday. They earlier hit $30.68, eclipsing a previous 52-week high of $30 set in December.

Aaron wrote in a research note that overall retail sales should improve in March, and that Harley should benefit from improved pricing on its bikes. He also said Harley may break a string of disappointing earnings when it reports first-quarter results on April 20.

But the RBC analyst isn’t the only one taking note of the famous American motorcycle manufacturer. In a recent article featured on MSN Money it was noted ‘Harley-Davidson says its own inventories and dealer inventories improved in the fourth quarter of last year and that a dealer survey by brokerage Robert W. Baird released in March found that nearly three-fourths of dealers believed inventory was "about right." The company says loan quality is improving because 80% to 85% of loans were considered "prime" last year, compared with 75% in prior years.’

All this attention does put pressure on Harley-Davidson to report improved results on April 20th when it announces its first quarter financial figures. This expectation tops weeks of reports that centered around a possible buy-out, allegedly auctioning off its Buell brand instead of selling to an interested buyer, SEO compensation as well as its board of directors making a list of being among the country's worst.

"While it is tough to get excited about this number in absolute terms, investors should be encouraged by the read-through to March and what it implies for the out-quarters, which benefit from much easier comparisons," Aaron said.