Tag: davidson

Harley Davidson (HOG) released Q3 results Friday and said it expects its current “weakness” to persist into 2008.

Q3 profit fell 15.3 percent due to weak sales of its motorcycles in the U.S. Net income totaled $265 million, or $1.07 per share, compared with a profit of $312.7 million, or $1.20 per share, a year ago. Revenue dropped 5.8 percent to $1.54 billion from $1.64 billion last year.

Worldwide retail sales of Harley-Davidson motorcycles were flat in the quarter, down 0.2 percent ans shipments were down 10.8 percent to 86,535 units. Domestically, sales were down 2.5 percent, while the overall U.S. heavyweight market fell 4.4 percent. International sales were up 8.8 percent.

HOG maintained its earnings expectations for the year, which it lowered last month due to slumping U.S. sales. They expect 2007 net income to drop 4 percent to 6 percent, to a range of $3.69 to $3.77 per share

They also repurchased 9.7 million shares of stock, at a cost of $509 million, during the quarter. YTD, the company has repurchased 17.3 million shares at a cost of $1 billion.

BUY? No. Not yet. In February, I posted that the price then at $75 would fall and at $60, would present a good value. As the credit situation worsened throughout the spring and summer I updated HOG shares in June and lowered my target price to $54 dollars a share. Then, after a trio to Laconia, NH, based on my observations and after talking to the sales staff, I posted in August that Harley was going to experience more sales declines and that the price, then in the mid $50’s was going to reach into the $40’s before the year was out. Harley confirmed my observations a few weeks later and at that point I said “anything below $45 is a no brainer buy”.

Shares today sit at $47, 37% off their highs. Buy? Just wait. There does not seem to be a impetus for shares and bike sales in the US anytime soon. Many Harley’s recently were bought with home equity money or through Harley financing much of which was “subprime”. Those financing avenues have dried up and do not look to rebound in the near future. This issue was addressed on the recent conference call when CFO Larry Hund said, “Consistent with previous quarters, HDFS continues to operate in a challenging consumer credit environment. Regarding past due accounts, the 30-day delinquency rate for managed retail motorcycle loans at the end of the third quarter was 4.91% compared to 4.46% for the third quarter of 2006. Managed retail loans include both those which we keep and those which we sell through securitization.

As expected, credit losses on managed retail motorcycle loans increased in the first nine months of 2007 compared to 2006. Losses totaled 1.65% on an annualized basis, compared to 1.18% for the first nine months of 2006. The increased losses are due to continued pressure on recovery values for repossessed motorcycles as well as a higher incidence of loss, primarily driven by the increase in delinquent accounts.”

International sales will make up the difference and cause earnings to just stagnate rather than fall dramatically as witnessed in the last quarter. In Q3 international shipments of 20,779 units were up 24.8% compared to the same quarter last year. This international shipment mix represented 24% of our total third quarter shipment volumes compared to 17.2% in the third quarter 2006.

For the first nine months of the year, domestic shipments represented 73.2% of the total shipments, down from 77.5% compared to the same period last year. International shipments for the first nine months of the year represented 26.8% of the mix, up from 22.5% in the first nine months of 2006.

Impatient investors will get sick of sitting on dead money and begin to sell. We will see a share price below $45 if not this year, then early next. I am going to go even further and say we could get it for $42.

I do not see mush more downside unless the economy worsens further. If you need to own HOG shares, buy then here, your downside isn’t not too great. If you can be patient, there is another 10% or more downside to shares.

I want to own Harley shares and think I just may get a great deal soon enough.

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UPGRADES

Take-Two TTWO MDB Capital Group Neutral » Buy
Varian Semi VSEA Credit Suisse Neutral » Outperform
Hutchison Telcom HTX Bear Stearns Peer Perform » Outperform
BearingPoint BE Jefferies & Co Underperform » Hold
Janus Capital JNS UBS Sell » Neutral
Bruker BioSciences BRKR Bear Stearns Peer Perform » Outperform
JB Hunt Trans JBHT Banc of America Sec Sell » Neutral
Werner Enterprises WERN Banc of America Sec Sell » Neutral
Pall Corp PLL Lehman Brothers Equal-weight » Overweight
Polaris Inds PII Rochdale Securities Hold » Buy
Edwards Lifesci EW Piper Jaffray Market Perform » Outperform

DOWNGRADES

Concur Tech CNQR DA Davidson Neutral » Underperform
BHP Limited BHP Credit Suisse Outperform » Neutral
State Street STT Punk, Ziegel & Co Mkt Perform » Sell
XM Satellite XMSR Wedbush Morgan Hold » Sell
SupportSoft SPRT Needham & Co Buy » Hold
Cavium Networks CAVM Needham & Co Buy » Hold
Hansen Natural HANS Stifel Nicolaus Buy » Hold
Leap Wireless LEAP Soleil Buy » Hold
COLT Telecom COLT Credit Suisse Outperform » Neutral
Business Objects BOBJ Credit Suisse Outperform » Neutral
Monster Worldwide MNST Wachovia Outperform » Mkt Perform
T. Rowe Price TROW UBS Buy » Neutral
Electronic Arts ERTS Bear Stearns Outperform » Peer Perform
Clearwire CLWR Bear Stearns Outperform » Peer Perform
Signature Bank SBNY Sun Trust Rbsn Humphrey Buy » Neutral
Hurray Holding HRAY Susquehanna Financial Positive » Neutral
KongZhong KONG Susquehanna Financial Neutral » Negative
Arcelor Mittal MT Banc of America Sec Buy » Neutral
Walgreen WAG Banc of America Sec Buy » Sell

McDonald’s (MCD)= +50%

Harley Davidson (HOG)= +20%

Village Supermarket (VLGEA)= +19%

Zenith Insurance (ZNT)= 19%

Trinity Industries (TRN)= 16.7%

Ethanol makers are showing up now…

WOS Wolseley Plc 18.66
VSE Verasun Energy Corp 11.92
PEIX Pacific Ethanol Inc 10.77
PAGI Pemco Aviation Inc 5.50
SIG Signet Group Plc 17.37
SHOO Steven Madden Ltd 18.76
NLS Nautilus Inc 8.28
HOG Harley-Davidson, Inc 46.50
FUN Cedar Fair, L.P. 23.84
CLDN Celadon Group Inc 13.73
BRN Barnwell Industries, Inc 14.95
BOW Bowater Incorporated 14.70
AVR Aventine Renewable Energy 12.10

WMAR West Marine Inc 11.35
WCC Wesco Intl Inc 41.75
SEH Spartech Corporation 17.51
SEED Origin Agritech Limited 6.76
RYL The Ryland Group, Inc 24.31
RT Ruby Tuesday, Inc. (G … 20.44
NT Nortel Networks Corp New 16.45
LCRY LeCroy Corporation 7.10
LANC Lancaster Colony Corp … 36.59
LAB Labranche & Co Inc 4.62
KKD Krispy Kreme Doughnut … 3.10
HOG Harley-Davidson, Inc 46.77
DF Dean Foods Co New 25.32
ALU Alcatel-Lucent 9.16

Here is the list, again assume homebuilders…

WOS Wolseley Plc 19.13
WGO Winnebago Industries, Inc 24.45
UNFI United Natural Foods Inc 24.82
TUES Tuesday Morning Corp 9.87
TLB The Talbots, Inc 18.54
THRD TF Financial Corp 25.82
RT Ruby Tuesday, Inc. 20.82
QSII Quality Systems Inc 33.89
PSS Collective Brands Inc 21.24
PPS Post Properties, Inc 37.20
POOL Pool Corporation 29.85
OPLK Oplink Communications Inc 12.59
ODSY Odyssey Healthcare Inc 9.41
ODP Office Depot, Inc 18.84
OCR Omnicare, Inc 30.07
HOG Harley-Davidson, Inc 48.01
INSP Infospace Inc 12.92
IMN Imation Corp 27.10
FFDF FFD Financial Corporation 14.00
FBN Furniture Brands Inte 10.56
DDS Dillard Department St … 19.91
CWTR Coldwater Creek Inc 11.15
BC Brunswick Corporation 22.57
AVR Aventine Renewable Energy 12.87

UPGRADES

Harley-Davidson HOG Soleil Sell » Buy
RADVision RVSN Ferris Baker Watts Neutral » Buy
Northwest Airlines NWA Calyon Securities Add » Buy
U.S. Steel X Citigroup Hold » Buy
Fifth Third FITB Bernstein Underperform » Mkt Perform
Stone Energy SGY Friedman Billings Mkt Perform » Outperform
Tempur-Pedic TPX CIBC Wrld Mkts Sector Perform » Sector Outperform
Occidental Petro OXY Deutsche Securities Hold » Buy

DOWNGRADES

American Software AMSWA Davenport Buy » Neutral
Cascade CAE DA Davidson Neutral » Underperform
Techne TECH Leerink Swann Outperform » Mkt Perform
US Airways LCC Calyon Securities Buy » Add
Continental Air CAL Calyon Securities Buy » Add
Alaska Air ALK Calyon Securities Buy » Add CMC Citigroup Hold » Buy

More big names made the list today..

WYE Wyeth
WPSC Wheeling Pittsburgh Corp
THC Tenet Healthcare Corp
TYC Tyco
SHRP Sharper Image Corporation
SHOO Steven Madden Ltd
PFE Pfizer Inc
ODP Office Depot, Inc
NWL Newell Rubbermaid Inc
NMX Nymex Holdings Inc
MOT Motorola, Inc
MCO Moodys Corp
M Macys Inc
KSS Kohl’s Corporation
HRB H&R Block, Inc
HOG Harley-Davidson, Inc
HD Home Depot, Inc
FL Foot Locker Inc
CTAS Cintas Corporation
BX Blackstone Group L P
BC Brunswick Corporation
BBY Best Buy Co., Inc
AMGN Amgen Inc
AMD Advanced Micro Devices