Earnings Preview: Harley-Davidson

Harley-Davidson (HOG) is expected to report Q3 earnings before market open Thursday, October 16, with a conference call scheduled for 9:00 a.m. ET.

Guidance

Analysts are looking for a profit of 79c on revenue of $1.43B. The consensus range is 73c to 82c for EPS, and revenue of $1.38B to $1.48B, according to First Call. In July, Harley-Davidson forecast FY08 EPS $3.00 to $3.18, a decrease of 15% to 20% from FY07 vs. First Call consensus of $3.15, and said it intends to ship between 74,000 and 78,000 Harley-Davidson motorcycles during Q3. Between the faltering economy, soaring food and gas prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved and have cut back spending on discretionary items.

Analyst Views

Based on accelerating weakness in consumer discretionary spending, pressure on gross margins from lowered shipments, increased pension cost and declines in financial service results, Soleil lowered its price target on October 13 to $38 from $48. Soleil maintained FY08 estimates of $3.04 for Harley, but reduced its FY09 EPS estimate to $2.66 from $3.20 and FY10 EPS to $2.94 from $3.53.

Additionally, A survey of Harley's dealers outside the U.S. by Baird analyst Craig Kennison found most were selling bikes well below the suggested retail price, which he calls a "troublesome" trend. Kennison says the company may feel additional pain from the credit freeze, as Harley has an in-house unit that helps buyers finance purchases. In an effort to reach out to a younger demographic, the company is set to team up with model Marisa Miller for a new ad campaign to promote the new V-Rod Muscle motorcycle.