Harley-Davidson (HOG) withdrew its full-year 2025 financial outlook amid tariff-related macro uncertainty, but it remains well-positioned compared with its peers due to its strong balance sheet, Morgan Stanley said Friday in a research note.

The motorcycle maker withdrew the full-year guidance while reporting Q1 results. Its Q1 net income came in at $1.07 per diluted share, beating the analysts' estimate of $0.77.

The bank said the softer demand situation could affect retail sales, which might drop below the company's original expectation of flat for 2025. It could also bring the revenue down below the original expectations of flat to down 5%.

The company's estimates of tariff impacts, mainly coming from China, will start hitting its books in the second quarter. However, the impact is primarily weighted to the second half of 2025, the bank noted.

"HOG says China exposure is only 6% and they are looking to lower that level, but noted it could take time, as certain parts and components are only manufactured in China (tires, for instance). Regardless, however, HOG would not expect the $130-175M tariff impact to be double that in FY26," Morgan Stanley said.

However, "there are potentially several idiosyncratic catalysts over the coming months that could support shares," the bank said.

To incorporate weaker demand expectations and some incremental margin pressure from tariffs, the bank reduced its estimates on the company by roughly 8%/13% for 2025/2026.

Morgan Stanley lowered its price target on the stock to $27 from $31. The rating remains equal-weight.

Price: 23.48, Change: +0.44, Percent Change: +1.89