) to market perform from buy.
Analyst Joel Wagonfeld says his downgrade was due to full valuation and a lack of catalysts. He notes the stock is up almost 50% from its market lows in early October 2.8 times the market's gain), at the high end of its historical valuation range. Wagonfeld thinks IBM shares already discount in-line fourth quarter and solid 2002 results. He says he doesn't see estimates rising in the near term, based on sluggish IT spending and IBM's broad mix.
Wagonfeld notes the company's diversified model provides less leverage in both directions. He trimmed the 2003 revenue (excluding the acquisition of Rational Software) estimate by 3% to $87 billion, reflecting the continuation of weak IT spending. He also cut the $4.35 earnings per share to $4.25.