Despite downgrade, analyst Timothy Conder increased the motorcycle-maker's price target to $41 per share from $40. The share price is a 2% upside from the stock's previous closing price of $40.31.
Harley-Davidson shares were down 1.5% to $39.70 per share premarket.
Conder said he believes that the risk-reward profile for the company is less attractive at current levels after a nearly 19% run-up since the start of the year.
He also noted that the entire industry, regardless of brand, is facing headwinds due to pricing and supply dynamics. He also noted that demand is shifting toward mid-sized and smaller motorcycles.