HP shares jump on recovery hope; analysts raise price targets

Fri Feb 22, 2013 4:48pm EST
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(Reuters) - Hewlett-Packard Co shares rose as much as 11 percent on Friday after the company's better-than-expected quarterly results and forecasts prompted at least eight brokerages to raise price targets on the stock, although analysts said problems at the world's No.1 PC maker were far from over.

HP's upbeat outlook comes as the company cuts costs under Chief Executive Meg Whitman's turnaround plan in the face of falling PC sales and slowing corporate IT spending.

"Although a number of businesses remain under pressure, the company's blocking and tackling is improving, and the likelihood of the bottom falling out appears diminished," UBS Investment Research analyst Steven Milunovich said in a note.

Milunovich upgraded his rating on the stock to "neutral" and raised his price target to $17 from $12.

HP shares have outperformed all other Dow Jones Industrial Average constituents this year. They closed at $19.20 on the New York Stock Exchange on Friday, the highest since August last year.

Before Friday's gains, the stock was up about 20 percent since the beginning of the year, helped partly by a buyout offer for rival Dell Inc.

HP, like other PC makers, has been hammered as consumers turn to tablets and other mobile devices. Underscoring the severity of the industry's woes, Dell on Tuesday reported a 31 percent drop in profit as sales fell in virtually every major business division.

In addition, HP has suffered internal turmoil with a failed spin-off attempt, a botched acquisition and two CEOs losing their jobs.

J.P. Morgan Securities analyst Mark Moskowitz, who raised his price target on HP stock by $1 to $22, said the company's results and outlook signaled that the worst may be over, but added that there was room for plenty of work to be done.   Continued...

A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto, California January 16, 2013. REUTERS/Stephen Lam