HOG Stock is Hurting After Earnings

Options bears piled on HOG stock ahead of earnings

Deputy Editor
Jan 29, 2019 at 10:09 AM
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The shares of Harley-Davidson Inc (NYSE:HOG) are spiraling this morning, down 7.5% at $33.84, after the motorcycle concern reported fourth-quarter earnings and revenue below analysts' expectations. The company said tariff costs surged in the quarter, and predicted an eight-year low in 2019 motorcycle shipments. Today, the security is slated for its worst day in nearly a year.  

HOG touched an eight-year low of $31.36 on Dec. 24, and suffered its worst quarter since 2008 -- a loss of 24.7%. The equity subsequently attempted a rebound, but found stiff resistance at the 50-day trendline. From a longer-term standpoint, the motorcycle stock has been in a channel of lower highs and lows since skimming the $63 level in early 2017.

The majority of analysts following HOG say proceed with caution, with 10 giving it a tepid "hold" rating, and one issuing a "strong sell" recommendation. For comparison, just four analysts are calling the stock a "buy" or better. However, the consensus 12-month target price of $41.35 still represents a 22% premium to current levels -- leaving room for potential price-target cuts following today's beating. 

Options traders took a bearish stance on Harley-Davidson ahead of earnings. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) says HOG's 10-day put/call volume ratio of 5.96 is in the 89th percentile of its annual range. This indicates that nearly six puts have been bought to open for every call -- and at a much quicker-than-usual clip -- in the past two weeks. 

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