UPDATE: JP Morgan Lowers PT on GeoEye to $24.50

JP Morgan maintains a Neutral rating on GeoEye

and lowers its price target from $29 to $24.50. JP Morgan comments, “GeoEye issued an 8K on Friday night revealing that the NGA has issued two letters regarding EnhancedView Year 3 contract negotiations, requiring a response from the company by July 6th. The NGA's proposals make future SLA payments contingent on hitting specific milestones regarding web-hosting capacity, and cost-share payments contingent on G2 launch milestones and a letter of credit guaranteeing ability to complete the project. This introduces a higher degree of risk into GeoEye's NGA revenue prospects, cash flow, and contrasts unfavorably with DGI's fully-funded status for contract year 3. We are making modest adjustments to our model, but lowering our price target to $24.50 to reflect increased risks. We expect the stock to trade down on these developments, and though we think GEOY is somewhat undervalued, we think investors should stay on the sidelines pending the company's formal response to the NGA, which should be clear sometime after July 6th.” GeoEye closed at $18.34 on Friday.