Harley-Davidson Stock Hits the Brakes After Dismal Q4 Report

The options pits are seeing a surge in call volume, though

Assistant Editor
Feb 2, 2021 at 11:08 AM
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The shares of Harley-Davidson Inc (NYSE:HOG) are plummeting this morning, down 19.6% at $32.33 at last check, after the motorcycle company posted a lackluster fourth quarter. Digging deeper, the security reported losses of 44 cents per share -- lower than the expected profits of 14 cents per share -- as well as a revenue miss. The retailer said in 2020 total shipments fell to their lowest level since 1997, while annual retail sales hit their worst bottom since 1998. The company did release a five-year plan that aims to generate low double-digit earnings growth through 2025, though.

Today's drop has Harley-Davidson trading at its lowest level since October, and slipping beneath the once-supportive 60-day moving average, which contained at least a couple of the security's pullbacks over the last few months. Already this year, HOG has shed 9.6%. 

Analysts were already pessimistic toward Harley-Davidson stock, with eight of the 12 in question carrying a tepid "hold" rating, while four said "strong buy." Meanwhile, the 12-month consensus target price of $40.40 is a 22.5% premium to current levels. In other words, price-target cuts could be on the horizon.   

That bearish analyst sentiment is not reflected in the options pits, though. So far today, 8,632 calls have already crossed the tape, which is 11 times what is typically seen at this point, and more than twice the number of puts exchanged. Most popular by far is the monthly February 34 call, followed by the weekly 2/5 35-strike call, with new positions being opened at both. In simpler terms, traders are betting on upside for HOG in the coming weeks. 

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