UPDATE: J.P. Morgan Lowering Price Target on Harley-Davidson

J.P. Morgan Chase & Co. is out with a research report on Harley-Davidson

and is lowering its price target to $38 from $44, and it has a Neutral rating on shares. In a note to clients, J.P. Morgan Chase & Co. writes, "Q3 sloppy on gross margin, but end demand seeing encouraging modest gains. The stock fell -7% (vs. S&P 500 of +2%) yesterday on Q3 gross margin disappoint and so-so guidance. Q3 gross margin was clearly impacted by York-related manufacturing stress that does seem to have been a bit worse than what we had expected, but FX seems to have been the bigger drag relative to expectations. At the end of the day, however, yesterday's stock price reaction was probably too harsh – York or FX, both are transitory issues, and we are more encouraged by what seems like improving end demand and used bike prices, albeit gradual improvement." Shares of HOG closed at $34.59 yesterday.