J.P. Morgan Downgrading Mettler-Toledo (MTD)

J.P. Morgan Chase & Co. is downgrading shares of Mettler-Toledo MTD to Neutral from Overweight. It has a price target of $148. In a note sent to investors, J.P. Morgan writes, "After posting exceptional 2010 results, with particular strength in emerging markets (>20% growth), Mettler-Toledo enters 2011 on strong footing. While we remain positive on both fundamentals and the ability of management to execute through good times and bad, at >20x consensus EPS, the stock now reflects significantly high expectations and accordingly, we would look for a pullback before adding at current levels. Emerging markets, namely China, continue to power growth. Emerging markets remain a key part of the growth strategy, accounting for ~33% of total revenues, nearly half of which now come from China, followed by India, Brazil and Russia (2-4% each). With over a twenty-year history in China, we are confident that growth in the region will continue to be the 15-20% range. Notably, despite several local competitors and “knock-offs” in the market, the #1 competitor in the region is only 10-20% its size; so, Mettler continues to have a clear advantage in scale. The China business currently is comprised of 70% industrial/30% laboratory, which may shift in the long-term as product inspection and government-funded research continue to ramp. Regarding other geographies, India, Brazil and Russia are expected to offer 15-20% growth although visibility and linearity of adoption may not be as clean as China." Shares of MTD gained $2.02 yesterday to close at $153.23, a gain of 1.34%.