UPDATE: JP Morgan Downgrades Seagate Technology to Underweight on End-Market Dynamics

JP Morgan downgraded its rating on Seagate Technology

from Neutral to Underweight and reduced its price target from $25 to $20. JP Morgan commented, "While Seagate has benefitted disproportionally from the impact of the tragic Thailand flood over the past year, we believe macroeconomic and secular factors stand to pressure the company's revenue and gross margin profiles. In our view, HDD stocks trade on gross margin trend-lines, which are likely to worsen, driving our call today. Shares of Seagate could remain upward biased in the next 30-45 days as LBO speculation continues, but our call is on the fundamentals. We believe that as signs of deteriorating fundamentals manifest, investors likely will lock in gains in Seagate and rotate into other stocks in 2013. In our view, the stock already has adjusted for the favorable capital allocation strategy." Seagate Technology closed at $29.03 on Tuesday.