SAN FRANCISCO (MarketWatch) -- Harley-Davidson Inc. shares skidded 12% Monday as analysts grew more skittish about motorcycle purchases in a downbeat economy.
Goldman Sachs chopped Harley's shares to sell, slashing its price target to $11, and whacking its 2009 profit outlook in half. RBC Capital Markets also took a more bearish stance, dropping its share-price target to $16 and cutting its profit outlook for this year.
Analysts at both brokerage houses used to have a price target of $30. Shares of the Milwaukee-based "hog" maker closed at $14.13.
Goldman analyst Patrick Archambault said he expects Harley's retail bike sales to fall by 30% this year, making it the worst year for new registrations since 1982.
In a research note, he said losses on stocks and real-estate investments will hurt the "higher-income demographic that accounts for a large part of the Harley-Davidson customer base."
Harley (HOG) is slated to report fourth-quarter earnings Jan. 23. At last check, analysts projected Harley's profit to drop 26% to 58 cents a share. Sales are pegged to fall 7% to $1.3 billion from the year-earlier period, according to a FactSet Research.
Recent executive departures -- one planned, another immediate -- aren't helping to boost the morale of Harley shareholders.
Chief Executive Officer James Ziemer said Dec. 15 that he plans to retire this year, capping a 40-year run with the company. On Thursday, Sy Naqvi quit as interim president of the motorcycle maker's finance unit, which helps consumers fund purchases of bikes.
Analysts had been flagging Harley-Davidson Financial Services as an area of concern. The unit is expected to make much less money, take on more delinquent loans, and be forced to find new sources of funding as the secondary market to sell its loans is dried up.
"Within several months, we think it's entirely possible that the company will have promising new leadership and lower expectations," wrote RBC analyst Edward Aaron. "In the interim, however, investors could have to take some pretty tough medicine, including meaningful production cuts, possible restructuring and maybe even a cut to the dividend."
Harley-Davidson just paid a quarterly dividend of 33 cents a share.
Shares are down 65% over the past year
Goldman Sachs chopped Harley's shares to sell, slashing its price target to $11, and whacking its 2009 profit outlook in half. RBC Capital Markets also took a more bearish stance, dropping its share-price target to $16 and cutting its profit outlook for this year.
Analysts at both brokerage houses used to have a price target of $30. Shares of the Milwaukee-based "hog" maker closed at $14.13.
Goldman analyst Patrick Archambault said he expects Harley's retail bike sales to fall by 30% this year, making it the worst year for new registrations since 1982.
In a research note, he said losses on stocks and real-estate investments will hurt the "higher-income demographic that accounts for a large part of the Harley-Davidson customer base."
Harley (HOG) is slated to report fourth-quarter earnings Jan. 23. At last check, analysts projected Harley's profit to drop 26% to 58 cents a share. Sales are pegged to fall 7% to $1.3 billion from the year-earlier period, according to a FactSet Research.
Recent executive departures -- one planned, another immediate -- aren't helping to boost the morale of Harley shareholders.
Chief Executive Officer James Ziemer said Dec. 15 that he plans to retire this year, capping a 40-year run with the company. On Thursday, Sy Naqvi quit as interim president of the motorcycle maker's finance unit, which helps consumers fund purchases of bikes.
Analysts had been flagging Harley-Davidson Financial Services as an area of concern. The unit is expected to make much less money, take on more delinquent loans, and be forced to find new sources of funding as the secondary market to sell its loans is dried up.
"Within several months, we think it's entirely possible that the company will have promising new leadership and lower expectations," wrote RBC analyst Edward Aaron. "In the interim, however, investors could have to take some pretty tough medicine, including meaningful production cuts, possible restructuring and maybe even a cut to the dividend."
Harley-Davidson just paid a quarterly dividend of 33 cents a share.
Shares are down 65% over the past year
