In the world of high finance, domestic motorcycle stocks seem to be running at full throttle. First quarter profit reports from both Harley-Davidson and Polaris Industries, (maker of Victory motorcycles) beat the wall street predictions and in the case of Polaris, sent the stock soaring 8% to a 52 week high to $64.86 on April 22nd. Victory and KTM motorcycles enjoyed an overall 16% increase in sales to $361.7 million from last year’s first quarter. . This marks the 2nd straight quarter of market share gains and retail sales growth for Victory
Although unit sales of the iconic brand Harley-Davidson were down in the first quarter, the decrease wasn’t as bad as the Street had anticipated. Shedding excess baggage by the new CEO has convinced the suits on Wall Street that the brand is serious about getting lean and the result has been a spike in stock prices, rising 35% since February. Rich Smith, a columnist at Motley Fool, a website that follows stocks, is bullish on the brand and says the company is keeping inventories low, promising to ship 7% fewer bikes than in 2009, and recommends buying the stock. The financial arm of the company also did better than expected and helped to dampen the profit slide.
HD stock took a brief run amid speculation of a hostile takeover by private equity group KKR. A move that some in the market says is inevitable if the stock price continues to slide. The reason is that the company has a solid brand and plenty of hard assets, which make it a juicy target for companies like KKR.
William Blair analyst Sharon Zackfia, is recommending a buy on the stock obviously thinking the HOG still has room to run.
Shares of PII which were trading at $45.91 on November 10th 2009 have since moved upwards more than 40% and jumped $4.28 per share after releasing Q1 profit numbers. Today’s rate stands at $62.59. Some Wall Street analysts predict Polaris stock will grow an additional 13-15% over the summer.