JP Mogan downgrades Xerox & Lexmark to its lowest Rating

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Date: Tuesday October 18, 2011 09:39:52 am
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    J.P. Mogan downgrades Xerox & Lexmark to its lowest Rating

    US IT hardware companies face a tough earnings season and could cut their 2012 outlook as macroeconomic challenges weigh on technology spending and a stronger US dollar and yen hurts demand, J.P. Morgan Securities said and downgraded Xerox Corp and Lexmark International to its lowest rating.

    JP Morgan urged investors to "steer clear of or trim positions in" Hewlett-Packard Co, Lexmark, Xerox, Brocade Communications Systems , Emulex Corp , QLogic Corp and STEC Inc."In our view, company-specific and secular dynamics facing these stocks stand to amplify end-demand risks related to broader macroeconomic challenges," the brokerage said. It downgraded Brocade, QLogic, Xerox and Lexmark by a notch to "underweight" as it expects these companies to cut their estimates by 10 percent or more in the near term.

    The brokerage expects these cuts will come in a series, potentially increasing in size in the first half of next year.Hard disk drive provider Seagate Technology’s margins could be hurt by new product transitions and market share losses in the enterprise segment, JP Morgan said and lowered its rating on the stock to "neutral."

    The brokerage, however, recommended Apple Corp, IBM Corp , NetApp Inc and EMC Corp as the "Big Four" for relative shelter to the macroeconomic challenges. It maintained its "overweight" rating on Apple and IBM citing limited downside risk to estimates in the next 3-6 months.

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