Harley-Davidson Inc. (HOG) shares rebounded slightly Thursday despite the second note in as many days suggesting the motorcycle company may see retail sales decline for the fourth quarter.

Shares of the Milwaukee-based company rose 1% to $50.59 at 12:30 p.m. EST. 

UBS analyst Robin Farley said in a Jan. 4 research note Harley's U.S. inventory could be down double-digits despite retail declines.

"We estimate even if there were high-single digit U.S. retail sales declines for the fourth quarter of 2017 (though we haven't completed checks for the full quarter yet, we believe the first half of the quarter declined), U.S. dealer inventory could still be down double-digits at year end, assuming the international mix is at 40% to 41%, a record for HOG," Farley said. "We estimate mid-single digit retail sales declines could mean U.S. inventory down 10% to 15% for 2017."

UBS rates Harley-Davidson stock at Neutral with a $56 price target. 

A day prior, Harley-Davidson stock slipped after research firm Longbow downgraded the stock to Underperform from Neutral, citing an ongoing pattern of weak U.S. sales.

The stock fell 3.4% to $50.26 just after the market opened on Wednesday, and closed the trading day at $50.04. The research firm set at $43 price target on the stock.

Longbow analyst David MacGregor's channel checks revealed U.S. retail sales are trending down 5% to 7% with U.S. shipments expected to be down by "at least 20%." Still, used bike sales are up 2% to 4%, "outpacing bike sales as customers continue to opt for more affordable options," MacGregor wrote in the note.

While MacGregor anticipates international shipments to offset U.S. shipments, there is a "strong chance" fourth-quarter shipments will either miss or be at the low-end of the company's shipment guidance, which is expected to be in the range of 46,700 to 51,700.

On top of potentially missing shipment estimates, MacGregor anticipates Harley-Davidson will issue below-consensus earnings results, weaker-than-expected fiscal year 2018 earnings per share guidance, as well as shipment forecast.

Fourth-quarter EPS is estimated to be 47 cents with full-year earnings of $3.43, according to data from FactSet Research Systems Inc.

Tough year for Harley?
Tough year for Harley?

In mid-December 2017, Goldman Sachs warned of weaker-than-expected sales in the fourth quarter. 

"Our recently conducted initial channel checks for the 4Q17 Harley-Davidson motorcycle retail selling environment point to a continued soft pace to new sales," Goldman analysts wrote. "We believe part of this relates to the company still managing-through/cleaning-out its dealer channel inventory - negatively impacting near-term sales, but could be positive for the company's 2018 shipments and potentially retail sales pace." 

Goldman has rated the stock at neutral with a $43 price target.

The stock has five Buys, 16 Holds and two Sells, according to Bloomberg data.

Harley-Davidson is scheduled to release its fourth-quarter financial results before the market opens on Tuesday, Jan. 30.

-- This story has been updated to include the Jan. 4 UBS research note.

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