Harley-Davidson shares rise after analyst upgrade

DETROIT -- Harley-Davidson Inc. rose Thursday after a Goldman Sachs analyst upgraded the shares, telling investors that the low price and looming motorcycle sales increases make the shares attractive.

Analyst Patrick Archambault upgraded Harley from "Neutral" to "Buy," and raised his six-month price target by $3 to $54. Harley shares rose 50 cents to $44.50, in afternoon trading.

Archambault wrote in a note to investors that Harley shares are down 19 percent since their April 25 peak closing price of $54.32. The drop came from slower sales and concern about production constraints continuing into next year, he wrote.

Now, as housing construction starting to recover, Harley sales are likely to rise, because there's a direct correlation between sales of the motorcycles and construction job growth, Archambault wrote. Although August sales were weak as the company pushed back its new model launch, checks with dealers show that registrations picked up significantly in September, according to the analyst. He expects Harley production to be at the top end of the company's estimates in the fourth quarter.

"We see this as a good entry point into the shares, which we expect to react positively to a reacceleration of sales in September," he wrote.

Archambault lowered his 2012 earnings-per-share estimate for Harley-Davidson by 2 cents to $2.87, but he boosted next year's estimate from $3.36 to $3.54.