UPDATE: J.P. Morgan Reiterates Underweight Rating, Lowers PT on Harris Corporation on Pre-Announced Q3 Results

In a report published Friday, J.P. Morgan analyst Joseph B. Nadol III reiterated an Underweight rating on Harris Corporation

, but lowered the price target from $45.00 to $39.00. In the report, Nadol noted, “HRS pre-announced its Q3 results, reduced its full-year guidance and disclosed a restructuring plan. The company did not disclose too many details, but the areas of weakness included both tactical radios and the Healthcare and CapRock businesses within the INS segment. Q4 guidance implies a sequential uptick in EBIT, and while business conditions are getting tougher rather than easier, we imagine that management must have a decent line of sight to this improvement at this late stage of the fiscal year and our estimate is therefore within the guidance range. However, the real question is where earnings are headed looking forward, and visibility appears quite low. We are now fully factoring the sequester and a tougher outlook for tactical radios into our estimates, which decline nearly to $4.00 for FY14E and below that level for FY15E. Our FY15 EPS estimate of $3.65 includes tactical radio assumptions of ~$900 mn of sales and a 35% operating margin versus the estimated $1.2 bn of sales and a 40% operating margin this year. We will look to the April 30 conference call to get more details on the issues as well as the restructuring plan, but in the mean time we are maintaining our UW rating and reducing our price target to $39 to reflect our revised estimates.” Harris Corporation closed on Thursday at 46.56.