Wells Fargo Downgrading Motorola Mobility

Wells Fargo is out with a research report on Motorola Mobility MMI and is downgrading shares to Market Perform and it has a $22-$23 price target on shares. In a note to clients, Wells Fargo writes, "We are downgrading shares of MMI to Market Perform (2). While Q2 showed some better-than-expected metrics, visibility appears too limited to warrant an Outperform rating, in our view. Driving our downgrade are 3 main issues: 1) concern about North America competitive smartphone environment in Q3; 2) MMI's guidance places a very high bar on Q4 performance, and 3) valuation is not enough to support the cause. While we appreciate MMI held its own in a tough Q2, the profitability of the model continues to be pushed out. At this point we believe it best to step to the sidelines until we become more comfortable with the competitive environment and MMI's role within this. Our new 2011E revenue and EPS are $13.7B and $0.57 versus prior estimates of $13.2B and $0.84. Our new 2012E revenue and EPS are $14.9B and $1.20 versus our prior estimates of $14.1B and $1.63. We are lowering our valuation range on the shares to $22-23 from $30-31." Shares of MMI are down $1.40 in pre-market trading to $21.51.