Lexmark: Barclays Downgrades As Printer Biz Weakens

Lexmark (LXK) shares are trading lower this morning after Barclays Capital analyst Ben Reitzes cut the firm’s rating on the stock to Underweight from Equal Weight. He chopped his price target to $17 from $26.

“While Lexmark is restructuring and could see some temporary benefits from supplies priceincreases,” he writes in a research note, “we remain concerned about business trends in both inkjet and laser supplies and do not see a strong near-term catalyst for hardware sales.” Reitzes adds that he sees risk from the company’s exposure to Dell (DELL) and from competition from Hewlett-Packard (HPQ), which spends about 4x more on R&D. “We prefer HP in printing as a consolidator and share gainer.”

For the March quarter, he sees EPS of 60 cents, two cents below the consensus; he expects the company to post a 12% decline in supplies, and a 25% drop in hardware. For 2009, he sees $2.05 a share, well below the Street at $2.36, on a 15% revenue decline. He sees 2010 EPS of $1.85 a share, below the consensus at $2.11.