Harley-Davidson Inc. is closing plants and laying off thousands of people, while sales of its motorcycles are falling, the company has excess capacity and its profits dropped 91 percent in the second quarter.

A headline in a commentary at MarketWatch.com proclaimed, "Harley-Davidson could be running out of time."

Standard & Poor's Ratings Service recently downgraded Harley's corporate rating to "BBB" from "BBB+"

With all that turmoil, you might think the outlook is gloomy for Milwaukee Iron. The analysts at Robert W. Baird & Co. Inc. disagree. Baird analyst Craig Kennison recently gave Harley's stock an "outperform" rating, no matter the headlines.

A key reason for Baird's optimism for Harley is the recent selection of Keith Wandell to be Harley's new chief executive officer. Wandell, 59, had previously served as president and chief operating officer at Johnson Controls Inc., where he built a track record of corporate streamlining and efficiencies.

That expertise is taking a toll on the Harley workforce, but Baird believes the cuts will pay off for Harley in the long run.

"We talked with management / dealers in meetings in Denver. We believe the turnaround story is building momentum led by a credible CEO with impressive credentials. Beyond the standard Harley noise -- we advise investors to focus on the strength of the brand, opportunities to lower structural cost, and ideas to finance HDFS in better ways. Details were limited, but we believe the turnaround story will attract investment," Kennison wrote.

"The Harley-Davidson brand is among the best on the planet, but its operations fall short of world-class. CEO Keith Wandell brings impressive operational credentials to Harley, understands its shortcomings, and has the mandate to make the tough decisions."

Dealers told Kennison that more Harley bikes are selling below the manufacturer's suggested retail price (MSRP), diminishing the value of the brand. Wandell is vowing to curb production of the bikes, thereby limiting the supply and preserving their prices through demand, Kennison said.

Meanwhile, Harley announced that it will introduce nine new models in 2010, the company's most expansive new-product launch ever.

Harley's stock has been selling for around $21.75 per share. After meeting with dealers and talking to Harley management, Baird lifted its price target for the Harley stock to $28.

"We are committed to doing what is required to enable Harley-Davidson to operate as a competitive business and employer over the long haul," Wandell said in Harley's most recent quarterly report.

"Doing what is required" may be of little consolation to the company's quickly diminishing workforce, but until the economy turns around and consumers have more discretionary income, jobs at Harley will continue to be precious commodities.