Harley-Davidson Revs Up after Market First

Things have been better for motorcycle icon Harley-Davidson (HOG).

The company used to make people think of an entire way of life with the merest mention of its name. That’s changed a lot in recent days, but this iconic brand is showing signs of making a comeback.

That’s all thanks to a major market first for the company. I’m bullish on Harley thanks to not only this latest move, but the others it’s made not so long ago.

The new year dawned brightly for Harley, with a fairly rapid rise in its share price. Those gains were lost, however, and new losses established over the span of two terrible days in February. The company rebounded, though it would take until April to get back to those January highs.

Harley then carried on right past said highs, closing over $50 for the first time in 2021 in May. The company then lost plenty more ground. In September, the company fell to around $35 per share. Harley has maintained a share price mainly in the $35-$40 range ever since. (See Analysts’ Top Stocks on TipRanks)

The latest news gives Harley-Davidson something of a market first. A deal with a special purpose acquisition company (SPAC) will take Harley’s LiveWire line of electric motorcycles with it. The resulting company will have a market value of around $1.7 billion, and will trade under the ticker symbol LVW.

The move will make Harley the first-ever publicly traded electric motorcycle company, reports note. Harley will actually own 74% of LiveWire, with AEA-Bridges Impact Corp. owning 17%, and electric scooter maker KYMCO holding 4%.

Wall Street’s Take

Turning to Wall Street, Harley-Davidson has a Moderate Buy consensus rating. That’s based on three Buys, one Hold, and one Sell assigned in the past three months. The average Harley-Davidson price target of $50.40 implies 33.7% upside potential.

Analyst price targets range from a low of $38 per share to a high of $70 per share.

An Icon Displays Flexibility

One of the downsides of being “iconic” is that those who earn the name tend to be inflexible. Maybe the cause is a focus on tradition, or prudence in trying not to rock the boat that got you so far already, or sheer inertia.

Whatever the cause, “iconic” brands tend to keep doing the same thing over and over again. Harley was no different for a while.

Not for long, however. Harley made a series of changes that allowed it to better roll with the punches. Back at the start of 2021, Harley rolled out a series of changes to several models.

Harley modified the Softail line, as well as to touring bikes and CVO models. That’s a bold move by most anyone’s reckoning. Modifying product lines during a pandemic is even bolder. This was just a few months after Harley planned to depart the Indian market altogether, despite spending a decade trying to establish a foothold therein.

Now, we’re in a time where EVs are increasingly popular. Harley has been right there with its LiveWire line. Just last month, the COP26 climate summit featured police mounted on LiveWire motorcycles patrolling the event.

In a market featuring out-of-nowhere names like Tesla (TSLA) and Rivian (RIVN), seeing Harley-Davidson step in is a big deal. Legacy automakers have been trying to enter the field for a while now, and Harley has already done it.

Concluding Views

Being iconic is often one step away from outright ossification. However, for Harley, the company is eager to maintain its iconic status by keeping up with the times. While it’s still possible to get that old Harley spirit, Harley has also rolled with the punches and produced.

Its prices seen lately are among 2021’s lowest. Better yet, now that Harley’s firmly entering the EV market, the company is moving along with the times. An iconic brand with flexibility of operations? That’s a package that’s hard to pass up.

Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.