UPDATE: JP Morgan Downgrades Dolby Laboratories to Underweight on Discouraging Outlook

JP Morgan reduced its rating on Dolby Laboratories DLB from Neutral to Underweight and cut its price target from $48 to $43.50. JP Morgan noted, "Unit sales across most of Dolby's licensing segments have slowed (smartphones excepted), and we are trimming FY12 estimates toward the mid-point of prior guidance, and to slightly below consensus. We believe DLB's revenues have stalled, with mobile-related licensing ramp merely offsetting declines in PC and CE segment royalties. Looking out to FY13 and CY13, we forecast flattish earnings and revenues, which does not justify a growth multiple, so we are trimming our price target to $43.50 based on 15 times CY13 PF EPS. DLB may be somewhat undervalued, but there is downside risk to estimates in our view, and lacking positive catalysts, we think the stock is likely to underperform the mean of our coverage universe, even if it is not a good candidate for shorting." Dolby Laboratories closed at $35.50 on Tuesday.