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Harley-Davidson shares remain in a bull market but the correction could be around the corner

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Harley-Davidson (NYSE: HOG)shares have been moving in an uptrend for a while, and according to the analysts, the correction could be around the corner. Morgan Stanley has downgraded its price target to $38 on Harley-Davidson, while UBS reported that the company faces concerns about how to increase sales in 2021.

Fundamental analysis: There are certainly better long-term investment opportunities at the moment

Harley-Davidson is an American motorcycle manufacturer founded in 1903 that has survived numerous ownership arrangements, periods of poor economic health, and intense competition. Harley-Davidson is one of two major American motorcycle manufacturers that survived the Great Depression, and the company has become one of the world’s largest motorcycle manufacturers.

Harley-Davidson shares have advanced from $25 above $41 since the beginning of October, and the current price stands around $40. Harley-Davidson reported Q3 results in October; total revenue has decreased by 9.9% Y/Y to $964M while Q3 GAAP EPS was $0.78 (beats by $0.57).

Total revenue has decreased below the expectations, and the company declared a $0.02/quarterly share dividend, which is in line with previous. Despite this, Morgan Stanley has downgraded its price target to $38 on Harley-Davidson and assigned an equal-weight rating from overweight.

“Harley delivered a strong, consensus-beating Q3 driven by cost performance. We raise our estimate and price target materially but modestly lag the current price, which has run up sharply, largely discounting the fundamental turnaround. We downgrade to EW to process the 5-year plan to be unveiled Jan ’21,” said an analyst from Morgan Stanley.

UBS assigned a neutral rating to Harley-Davidson as the company faces concerns about increasing sales in 2021 and notes the 90-day rally in the share price.

Harley-Davidson is a stable company with good fundamentals, but the current share price is a little expensive. There are certainly better long-term investment opportunities at the moment, even though Harley-Davidson has an excellent position in the market.

Technical analysis: The correction could be around the corner

When we look at the chart below ( one year period), we can see that  Harley-Davidson shares have advanced from $14.3 above $41, and as long the price is above this trend line, this stock remains in the bull market. UBS assigned a neutral rating to Harley-Davidson after a rally in the share price, and according to the analysts, the correction could be around the corner.

Data source: tradingview.com

The critical support levels are also $35 and $30; $45 represents the resistance level. If the price jumps above $45, it would be a signal to trade shares, and the next target could be around $50, but if the price falls below the $35 support level, it would be a firm “sell” signal.

Summary

Harley-Davidson is a stable company with good fundamentals, but there are certainly better long-term investment opportunities at the moment. Morgan Stanley has downgraded its price target to $38 on Harley-Davidson, while UBS reported that the company faces concerns about how to increase sales in 2021.

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