Wednesday, April 12, 2006

Harley Loses Gas: We're Still Sellers

Harley-Davidson (HDI) shares tanked 6% on Wednesday after the motorcycle giant posted higher 1Q earnings but gave an outlook for bike sales that had bears crying across the Street.

The Milwaukee company reported a 1Q profit of $234.6 million, or 86 cents a share, up from a year-ago profit of $227.2 million, or 77 cents a share. Revenue rose 4% in the latest three months to $1.29 billion from $1.24 billion in the same period a year earlier.

Goldman Sachs analyst Julia Crowell pointed to the shipment target as the likely catalyst for the selling, citing "We believe the only negative was the company's low 2Q shipment guidance of just 78,000 bikes, which is below our estimate."

Felicia Kantor Hendrix of Lehman Bros reiterating her underweight rating on the stock, said investors will likely focus on this 2Q forecast, which she says sets the company up for a no man's land come 3Q/4Q.

As for us? Well, we beat everyone to the punch. Here's the short research report we shot out to clients way back on March 1st.

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