JP Morgan is upgrading Apple (NASDAQ:AAPL) to Overweight from Neutral. Apple’s model is far more diverse than previous vintages, and they think the staying power has been underappreciated. With its market share momentum likely intact, Apple in firm's view offers strong relative downside protection to the looming earnings reset that they expect to impact IT Hardware companies in coming weeks and again early next year.

- Diverse model provides staying power. There has been considerable investor concern lately over the Apple model losing steam, particularly if the consumer vertical rolls over. JPM estimates that the company’s total model exposure is about 70-75% consumer, but they think that Apple’s brand and market share momentum offer meaningful buffers to potential macro-driven pressures on the consumer.

- Retail expansion could sustain share gains and international momentum. JPM thinks a major force behind Apple’s growth story will be its diversifying revenue streams. They expect Apple’s penetration of the international markets to be measured in years and supported by the increasing build-out of the retail stores overseas.

- iPhone could lead to the enterprise or other content-rich devices. Firm thinks the iPhone could be a stepping stone to penetrating the enterprise. Also, they could envision the iPhone pushing Apple deeper into the set-top box market as the convergence of voice, web, data, and content continues.

- Expect numbers to come down across the sector, but Apple likely has a backstop beyond the first round. For Apple, they are revising their below-consensus revenue and EPS estimates. Looking to fiscal 2009, revenue and EPS estimates are $36.98 billion and $5.27, versus the Street consensus of $40.26 billion and $6.02.

- Apple trades at 18.8x JPM's calendar 2009 EPS estimate, versus the peer group average of 11.1x. With macro pressures showing no signs of dissipating, they believe it is time to play defense, and they think Apple can avoid having a major problem with the “E” in the price-to-earnings multiple moving through the coming year. Firm expects the company’s model to limit a series of major earnings cuts from unfolding in coming quarters, and they think this should support a valuation gap in Apple’s favor.

Notablecalls: Another valuation call. Things will be bad but Apple will be less bad than others. Does that really convince anyone?

Note that JPM is also upgrading IBM to Overweight with DELL, LXK and NTAP getting their ratings slashed.