) 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.