JP Morgan Believes DBD Will Struggle To Post Earnings Growth In The 2010-2012 Time Frame

Analysts at JP Morgan maintain their "neutral" rating on Diebold Incorporated

, while reducing their estimates for the company. The target price for DBD has been reduced from $34.50 to $31.50. JP Morgan says, “J.P. Morgan is now calling for global GDP growth of 2.8% in 2011, a decline from 3.3% in 2010E. The U.S. GDP outlook has been trimmed relative to prior expectations and stands at 2.8% in 2010 and 2.4% in 2011. Within the context of our coverage, we believe DBD is one of the more cyclically sensitive stocks.” “We are cutting the growth rate for the core Security and Financial Services offerings by 50% and now look for 2.9% revenue growth in 2011 and 1.2% in 2012. We leave unchanged our assumption that the one-off Brazilian Electoral Systems contract revenue concludes in 1Q11, and thus we look for a 1.8% y/y decline in overall revenue in 2011….We believe DBD will struggle to post earnings growth in the 2010-2012 time frame. We are now below consensus for 2011,” the analysts add. JP Morgan has lowered its PF EPS estimates for CY11E and CY12 from $2.19 to $2.08 and from $2.30 to $2.10, respectively.