Harman Jumps As JPMorgan Starts At 'Overweight'

NEW YORK (AP) — Shares of stereo and audio-equipment maker Harman International Industries Inc. gained Tuesday after JP Morgan started coverage with an "Overweight" rating, calling it an "under-followed fallen angel" with strong potential to grow revenue.

JP Morgan analyst Himanshu Patel said in a note to investors that he sees a turnaround over the next two years.

Last week, Harman posted a loss of $423 million, or $7.19 per share, for the year ended June 30. Excluding restructuring and goodwill charges, the loss was $1.01 per share. Sales in all its divisions dropped due to the downturn in the auto industry and slow consumer spending.

Patel said the company is trying to shrink its consumer division to stem losses, focusing more on the auto sector and high-end electronic systems for recording and public venues. In the automotive branded audio market, Harman's most direct competitor is Bose, though it also competes with companies such as Boston Acoustics, Bang & Olufsen and Dynaudio. Harman's brands include JBL, Infinity, Harman/Kardon, Mark Levinson and Lexicon.

Patel said Harman also has the opportunity to build sales in emerging markets, such as China, as well as sales of mid-market infotainment systems — navigation, advanced global positioning and entertainment — in autos priced between $25,000 and $45,000.