BofA Lowers Harley-Davidson to 'Neutral'

Analyst Gary Cooper says the gap between supply and demand has collapsed for the motorcycle maker

Banc of America downgraded Harley-Davidson (HDI ) to neutral from buy.

Analyst Gary Cooper believes Harley-Davidson's retail sales continue to be weak in the second quarter, and thinks the gap between supply and demand has collapsed. He cut the $2.70 2004 earnings per share estimate to $2.60, and cut the 8% unit growth estimate to 5% -- due to building retail inventory and difficult comparisons from Harley-Davidson's 100th anniversary model year.

Cooper thinks gross margin expansion will be limited by new capacity, the introduction of new models, and limited increases in pricing next year. He cut the $50 target to $39, due to a collapse of supply and a gap in demand; he no longer thinks Harley-Davidson's shares deserve a premium multiple.

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