President Donald Trump once again lashed out at Harley-Davidson Inc (NYSE: HOG) over the weekend, taking to Twitter to encourage a boycott of the company’s motorcycles if it follows through with its plan to move manufacturing overseas.
The company says tariffs and rising costs associated with Trump’s trade war will take a huge bite out of its profits unless it shifts manufacturing outside the U.S., and analysts and investors are watching closely to see whether or not Harley-Davidson is bluffing.
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Following the HOG earnings report last month, the company said it would incur up to $55 million of increased costs in 2018 and $100 million in additional costs per year due to the trade war unless it shifts some of its production overseas. Those costs include U.S. tariffs on steel and aluminum and European tariffs on imported motorcycles.
On Sunday morning, Trump threatened Harley on Twitter.
“Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better,” Trump said.
It’s not the first time Trump has blasted Harley-Davidson on twitter. In June, Trump said Harley shifting jobs overseas would mark “the beginning of the end” for the company.
HOG stock is down 15 percent year-to-date on concerns about rising costs associated with the trade war and declining North American sales volumes. Harley reported a 0.7 percent increase in international retail sales in the most recent quarter but said overall shipments were down 11.3 percent due to a sluggish U.S. market.
CFRA analyst Efraim Levy says it’s difficult to make reliable predictions about Harley’s business in the near-term.
“Although we have a positive outlook for long-term sales growth, near-term results could be weighed down by higher European tariffs, inventory adjustments, unfavorable exchange rates and aggressive competitor pricing,” Levy says.
He says Harley will continue to work to keep its prices in check by looking to trim costs however it can.
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“The production shift outside the U.S. would be an ironic response to the Trump administration’s trade policies given its desire to increase U.S. manufacturing activity and jobs,” Levy says.
CFRA has a “hold” rating and $47 price target for HOG stock.
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HOG Stock: Trump Targets Harley-Davidson Inc, Again originally appeared on usnews.com
