Wells Fargo Downgrades Motorola Mobility Holdings (MMI) to Market Perform Due to Weak Outlook

Wells Fargo downgraded shares of Motorola Mobility Holdings (NYSE: MMI) to a Market Perform rating and lowered its valuation range from $30-$31 to $22-$23.

The company reported solid Q2 results with $3.33 billion in revenue and EPS of $0.09, ahead of the firms estimates of $3.04 billion and $0.05. The firm notes that the upside was due to better than expected home results with a PF operating margin of 9.9 percent, topping Wells estimate of 8.5 percent.

The second half of the year looks strong for the company as they plan on release another LTE smartphone and 2 more LTE tablets. MMI also has a refreshed lineup at Sprint (NYSE: S).

Motorola Mobility provided disappointing Q3 guidance with EPS expected to be $0.00-$0.10. The company lowered its total smartphone shipment guidance from 21-23 million to 20-23 million.

Following MMI's Q2 results and market trends, the firm is cutting its Q3 and 2011 EPS estimates from $0.31 and $0.84 to $0.06 and $0.57. The firm also lowered its 2012 estimate from $1.63 to $1.20.

An analyst at Wells Fargo comments, "While MMI has held its own in U.S. and shown nice international growth, we remain concerned in our outlook for H2 2011. Driving this is concern about Q3 2011 competitive environment as well as the very high bar set for Q4 2011 in terms of guidance."

For more ratings news on Motorola Mobility Holdings click here and for the rating history of Motorola Mobility Holdings click here.

Shares of Motorola Mobility Holdings closed at $22.91 yesterday.

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