Harley-Davidson Inc. (NYSE: HOG) has had a rough go of 2018, with its stock down about 19% so far. While the overall market climate might be to blame for most of this drop (especially in late-January and early February), Harley still has to shoulder some responsibility for its shareholders. One analyst is taking a somewhat optimistic outlook, despite all the obstacles that Harley faces.

Wedbush initiated a Neutral rating with a $44 price target, implying 7% upside from Thursday’s closing price of $41.08.

Overall, Wedbush sees the price deterioration in its most recent used motorcycle pricing analysis as a major problem for Harley. While the firm has seen a deterioration in used bike pricing before, it appears to be less a function of supply and more a function of demand, which may be more difficult to address, especially following what the company argued was two of the most significant new product launches in the company’s history.

The brokerage firm went on to say:

For the last few years, we believed Harley had a used bike inventory problem that led to lower prices and in turn a mix problem, as used bikes were perceived to be of greater value, and thereby commanded an increasing share of total sales. Total demand was solid, and so if this pricing gap could be reversed, we could see new bike sales return to a growth rate that mirrored or exceeded total demand.

Ultimately, 2017 showed some signs of hope on this front, but as used bike pricing trends improved, new bike sales only worsened. This appears to be the function of worsening total demand, which Wedbush notes flattened out in 2016 and declined in 2017.

As demand for used bikes has gotten worse over the course of the past six months, Wedbush is now seeing this having a negative impact on used bike pricing, which it fears will, in turn, put further downward pressure on new bike sales.

Shares of Harley Davidson closed Friday at $40.68, with a consensus analyst price target of $48.46 and a 52-week trading range of $39.34 to $56.95.

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