We are downgrading our rating on AGCO Corp. (AGCO) from Neutral to Underperform. The company is witnessing soft demand conditions in most of its markets due to the significant slowdown in the global economy.

The near-term outlook for agricultural equipment is extremely uncertain, especially in Europe, which represents a major portion of the company’s total revenue. Given the continued slowdown in the global economy, tighter credit markets and unfavorable
foreign currency exchange rates, AGCO expects 2009 revenue to decline 20 23% from $8.4 billion in 2008.

Also, the company forecasts 2009 EPS in the range of $1.30 $1.50, compared to $4.09 in 2008 due to weak sales and lower margins.

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