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Analyst Blog

Shares of Harman International Industries (HAR - Snapshot Report) reached a new 52-week high of $111.23 on Thursday, March 20, 2014. The bullish run reflects Harman’s impressive second-quarter earnings, strong product pipeline, solid patent portfolio and new business awards.

The closing price of Harman on Mar 20 was $110.90, representing a strong one-year return of about 146.8%. The S&P 500 jumped 20.4% during the same period.

Harman delivered an average positive earnings surprise of 13.6% over the past four quarters. This Zacks Rank #1 (Strong Buy) stock has a market cap of $7.52 billion and a long-term expected earnings growth rate of 24.1%.

Key Growth Catalysts

Harman reported an impressive second quarter of fiscal 2014. Earnings of $1.09 per share comprehensively beat the Zacks Consensus Estimate by 11 cents. Earnings per share jumped 84.7% from the year-ago quarter. Revenues increased 25.8% from the year-ago quarter to $1.33 billion and were ahead of the Zacks Consensus Estimate of $1.25 billion.

Harman continues to win new business awards. In the second quarter, the company’s Infotainment division won customer awards worth $725.0 million from the likes of VW Group, Chang’an, Geely, Yamaha, Suzuki, BMW, Jaguar/Land Rover.

The company launched car audio systems in several vehicles, including a Lexicon system in the Hyundai Genesis and a JBL system in the Toyota (TM - Analyst Report) Highlander. Moreover, the recently announced partnerships with Softbank, Sprint Corp. (S - Analyst Report), Trikomsel and Brightstar will expand Harman’s market share, going forward.

Furthermore, Harman continues to expand through its partnerships with the likes of Apple (AAPL - Analyst Report). We believe that the new restructuring program will significantly improve profitability in the near term. This will provide Harman a competitive edge over the likes of Sony Corp. (SNE - Snapshot Report) going forward.

Estimate Revision

For the third quarter of 2014, the Zacks Consensus Estimate increased a nickel to 99 cents over the past 60 days.

For fiscal 2014, the earnings estimate jumped 20 cents to $4.22 per share over the past 60 days. For fiscal 2015, the earnings estimate increased 30 cents to $5.38 per share over the same period.

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