UPDATE 1-RESEARCH ALERT-Goldman cuts Harley to sell, shares fall

Jan 12 (Reuters) - Goldman Sachs downgraded Harley Davidson Inc (HOG.N) to "sell" and added the motorcycle maker to its conviction sell list, sending its shares down as much as 13 percent.

The brokerage, which also slashed its six-month price target on the stock to $11 from $30, said it expects considerable downside to the stock from headwinds in global luxury-motorcycle demand and tighter credit.

Aspirational products such as heavyweight motorcycles are likely to be among the hardest hit, with the financial downturn disproportionately affecting the higher income demography that makes up a large portion of Harley Davidson's clients, analyst Patrick Archambault said.

"These factors underpin our new forecast for a 30 percent contraction in Harley retail bike sales in 2009. This would exceed the largest declines in Harley Davidson registrations since the early 1970s," he said in a note to clients.

Separately, RBC Capital Markets also cut its price target on the company to $16 from $30, and advised caution, saying it sees a year of "significant change" for Harley.

"Investors could have to take some pretty tough medicine, including meaningful production cuts, possible restructuring and maybe even a cut to the dividend," RBC analyst Edward Aaron said in a note to clients.

Shares of the Milwaukee-based company fell to $14.00, before paring some of its losses to trade at down $1.82 at $14.18 on the New York Stock Exchange. (Reporting by Biswarup Gooptu in Bangalore; Editing by Amitha Rajan)