Baird analyst Craig Kennison said he
has more confidence now in the
"dynamic turnaround story"
though he did not change his outlook.
Harley-Davidson Inc.'s restructuring plans are firmly in place and the motorcycle maker is on its way to saving money, being quicker to market with new products and expanding abroad, analysts said Wednesday.
The motorcycle maker held an analyst meeting Tuesday in its hometown of Milwaukee to update investors on the first 18 months of its three-to-five year restructuring plan. Sales slumped as the economy tanked because shoppers didn't want to spend extra money on motorcycles, which hurt the company.
Baird analyst Craig Kennison said he has more confidence now in the "dynamic turnaround story" though he did not change his outlook.
The company's turnaround plan calls for achieving $300 million in cost savings by 2013 and driving efficiencies at production plants and in the way products are brought to market.
Kennison said the company is following through on its vision, led by Keith Wandell, who became CEO in 2009.
Besides saving money by being more efficient at its manufacturing plants in Wisconsin and Kansas City, Harley plans to continue expanding internationally. Kennison said the company plans to add between 100 and 150 new dealers through 2014 in more than 30 countries. It will change its methods depending on each market. For instance, to avoid steep tariffs in India, Harley will ship 'kits' to be assembled there, which will help it avoid the tariffs.
"Strategy will likely vary by market, but we believe this 'kit' strategy will continue," he told clients in a note.
Another new initiative is to reduce the amount of time it takes to develop and bring a product to market from five years to three.
UBS analyst Robin Farley said she liked a new program that allows dealers to order custom bikes direct from the factory, which will lower costs for the customer but increase profitability.
She said it was a "positive sign of things to come."
Farley maintained her "Neutral" rating and $31 target share price while Kennison has an "Outperform" rating and $38 target share price.
Milwaukee Journal Sentinel
10/19/10After declining 15 consecutive quarters, U.S. demand for Harley-Davidson motorcycles seems to be bottoming out, said Baird analyst Craig Kennison.
The company's shares "have tumbled in a bad market, setting up another opportunity for patient investors," he wrote Tuesday in a note to clients.
Grandpa: $38 price target on what seems to be a bottoming out...oh, I forgot the patient investor perspective as that worked so well for the U.S. Equity market during the past 10 years. How many HOGS were purchased with home equity loans during the housing bubble Mr. Kennison?