Harley-Davidson's Q2 earnings overshadowed by HDFS deal, price target raised to $34 by DA Davidson.

Harley-Davidson's Q2 earnings were overshadowed by its HDFS transaction with KKR and PIMCO, which the firm views as "clearly transformational" and aiding the company's balance sheet. DA Davidson analyst Griffin Bryan raised the price target to $34 from $31 and maintains a Buy rating, citing the deal's unlock of over $1B in cash and other catalysts such as inventory reduction and new $6K bike.

Harley-Davidson, Inc. (NYSE: HOG) recently completed a significant milestone in its strategic partnership with KKR and PIMCO, marking a substantial shift in its financial services arm, Harley-Davidson Financial Services (HDFS). The transaction involved the sale of residual interests in securitized consumer loan receivables, generating over $230 million in proceeds [1].

The partnership, announced earlier in the quarter, aims to transform HDFS into a capital-light and derisked business. This move will enable Harley-Davidson to continue originating and servicing both new and existing retail loans while reducing its balance sheet exposure. The transaction involved the sale of 95% of the residual interests in securitized consumer loan receivables, representing aggregate retail loan receivables of approximately $2 billion and related debt of approximately $1.8 billion at June 30, 2025 [1].

Harley-Davidson Chairman, President, and CEO Jochen Zeitz commented on the progress made, stating, "Since we announced our strategic partnership with KKR and PIMCO earlier this quarter, we have made excellent progress on our path to completing the transaction, and we are pleased to have achieved this major milestone with our partners so quickly" [1].

The completion of this transaction eliminates approximately $2 billion in variable interest entities and $1.8 billion of debt from Harley-Davidson's balance sheet. The generated proceeds will be used to support the company's capital allocation priorities, as set forth when the transaction was announced [1].

DA Davidson analyst Griffin Bryan recently raised the price target for Harley-Davidson to $34 from $31, citing the deal's unlock of over $1 billion in cash and other catalysts such as inventory reduction and the introduction of a new $6,000 bike. The analyst maintains a Buy rating, underscoring the transformative potential of the HDFS transaction [2].

Harley-Davidson's Q2 earnings were overshadowed by the HDFS transaction, but the company remains optimistic about the long-term benefits it will bring. The strategic partnership with KKR and PIMCO is expected to enhance Harley-Davidson's financial flexibility and position the company for future growth.

References:

[1] https://www.prnewswire.com/news-releases/harley-davidson-achieves-milestone-in-strategic-partnership-with-kkr-and-pimco-with-completion-of-sale-of-residual-interests-in-securitized-consumer-loan-receivables-302538018.html

[2] https://www.davidsond.com/ (DA Davidson Analyst Report)