Harley Set for Profit Pressure Post Small Bike Launches As It Attempts to Build Awareness Overseas
We have lowered our fair value to $34 from $44 per share for wide-moat Harley-Davidson, after incorporating assumptions that include the firm’s entry into middleweight and small displacement bikes in 2020, which we expect to drag on profitability. The decline in our fair value stems from lower gross margin (more than $10) and average selling price declines ($3 impact), which are partially offset by volume increases that helped better lever selling, general and administrative expenses. Our foreca...Harley-Davidson is the parent company of Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). The company's segments are: Motorcycles and Related Products, which consists of HDMC that designs, manufactures and sells Harley-Davidson motorcycles as well as motorcycle parts, accessories, general merchandise and services; and Financial Services, which consists of HDFS that is engaged in the business of financing and servicing wholesale inventory receivables and retail consumer loans, primarily for the purchase of Harley-Davidson motorcycles. HDFS also provides motorcycle insurance and protection products to motorcycle owners.
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