Shares of Harley-Davidson (NYSE: HOG) are trading up 1.26 percent after spiking lower at the opening bell Wednesday morning. The rally may be due to a bullish note from Morgan Stanley analyst Adam Jones.
In the note, Jones said the company's "very strong" margin performance in the second quarter was more than offset by a downward fiscal-year shipment revision. This has caused Jones to cut his volumes expectations for the second half of 2014 by nine percent and his full-year 2014 EPS estimate by four percent to $3.85, as well as a slight decrease to his price target from $80 to $77.
Despite these revisions, Jones has maintained an Overweight rating and suggests buying the weakness in the company's shares. To emphasize this point Jones wrote, "The chance to buy this quality, cash flow generating company (with practically zero China exposure) at a discount to the market despite US motorcycle sales nearly 40 percent below previous peak is a unique opportunity."
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