Zacks Investment Research downgraded shares of EMC Corporation (EMC) from NEUTRAL to UNDERPERFORM on November 21, 2012, with a target price of $22.00.
EMC reported a disappointing third quarter, as its earnings missed the Zacks Consensus Estimate for the second consecutive quarter. Revenue also fell short of the consensus mark. Although, we believe that EMC is well positioned to benefit from incremental data center hardware spending (due to higher adoption of cloud computing), sluggish worldwide IT spending for the next couple of years and increasing competition will weigh on the stock going forward. We believe that EMC's vast product portfolio, which has products suitable for any kind of budget, will boost its market share going forward. However, frequent acquisitions, increasing foreign currency risk (due to strong US dollar) and pricing pressure due to stiff competition will hurt profitability going forward. We, therefore, downgrade our recommendation on the stock from Neutral to Underperform and set a price target of $22.00.
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