RBC Capital Cuts Harley-Davidson

Analyst Edward Aaron believes the motorcycle maker's recent production cut throws its long-term growth rate into question

RBC Capital cuts Harley-Davidson (HDI ) to sector perform from outperform.

Analyst Edward Aaron says while management attributed its production cut to slow first-quarter sales, he believes the issue runs much deeper.

He says for years, Harley-Davidson never knew its true growth rate because of supply/demand imbalance. But now that supply/demand have come into parity, he believes it is clear company's underlying growth rate is lower than management or investors perceived.

While he continues to regard Harley-Davidson as an excellent company, its long-term growth rate is now very much in question. He anticipates lowering his $3.90 2006 earnings per share estimate to $3.60 (preliminary). He cuts his target to $50.

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