UPDATE: J.P. Morgan Downgrades Modine Manufacturing Co. to Underweight, Reiterates $11 PT as Growth Opportunities May Take Longer Than Expected

In a report published Wednesday, J.P. Morgan analyst Michael Shlisky downgraded the rating on

from Neutral to Underweight, but reiterated the $11.00 price target. In the report, J.P. Morgan noted, “In Europe, the changeover of emissions standards in the European commercial vehicle market to Euro 6 will necessitate a variety of heat-transfer products; MOD management expects its products to have 40% or higher market share once the standard is fully rolled out (vs. 10%-12% today). While the long-term profit potential of this business is promising (when combined with restructuring, discussed below), the roll-out to Euro 6 may be bumpier than expected. While many originally believed there would be some Euro 6 commercial vehicles sold in 2013, given past government incentives to adapt new emissions standards early, customers are instead purchasing more Euro 5 trucks in 2013 in anticipation of price increases for trucks next year of €10,000-€15,000. Going forward, we believe FY'14 expectations may be revised downward as the full Euro 6 changeover may take longer than expected. Commentary by PCAR, Scania, and others suggests that Euro 5 trucks are being sold ahead of the 2014 emissions changeover, as dealers can stockpile inventory in some locations. Given macro conditions in the region, we believe customers will continue to prefer the cheaper Euro 5 models as long as they are available, and increased demand for Euro 5 trucks will pull from CH1'14 demand. Dealers may also prefer the Euro 5 models as used units are easier to sell to regions such as Eastern Europe.” Modine Manufacturing Co. closed on Tuesday at $15.04.