"The risk is that retail trends may continue to weaken at Harley-Davidson causing inventories to build. Harley-Davidson may then lower its production numbers," analyst Gregory Badishkanian wrote in a note to clients.
(Reuters) - Citigroup removed U.S. motorcycle maker Harley-Davidson Inc <HOG.N> from its top picks live list, and said dealer checks suggest that retail sales in the United States, its biggest and most important market, fell 5 to 8 percent in January/February.
"The risk is that retail trends may continue to weaken at Harley-Davidson causing inventories to build. Harley-Davidson may then lower its production numbers," analyst Gregory Badishkanian wrote in a note to clients.
If this occurs, the firm may not be able to achieve its 2008 forecast of modest revenue growth and 4 percent to 7 percent earnings-per-share growth, Badishkanian added.
The analyst, however, said he expects continued strong international retail sales, similar to the 17.4 percent growth posted in the fourth quarter.
!ADVERTISEMENT!He also said the weakening U.S. dollar should continue to benefit the company's international business.
Badishkanian has a "sell" rating and price target of $34 on the stock.
The Milwaukee-based company's shares are trading near five-year lows, the analyst said, adding that the stock may not have that much more downside to his price target.
Shares of the company closed at $36.80 Thursday on the New York Stock Exchange.
(Reporting by Tenzin Pema in Bangalore; Editing by Jarshad Kakkrakandy)
