NEW YORK (TheStreet) -- HP (HPQ) shares slipped more than 1% on Thursday after UBS cut its earnings estimate and price target, just days after the embattled PC maker was dropped from the Dow Jones Industrial Average.
Citing HP's underwhelming third-quarter results last month, UBS warned that the tech giant could give disappointing earnings guidance at its analyst meeting on Oct. 9.
"We expect that the disappointment of F3Q will impact the earnings guidance at the meeting, partially offset by a solid free cash flow expectation and an increased share repurchase program," wrote UBS analyst Steven Milunovich, in a note.
UBS reduced its fiscal 2014 earnings estimate for HP to $3.55 a share from $3.80 a share. It also cut the company's price target to $24 a share from $28 a share.HP shares dipped 1.26% to $21.99 during late morning trading on Thursday, easily outpacing the 0.2% and 0.1% declines on the Dow and the S&P 500, respectively. Led by CEO Meg Whitman, HP is in the throes of a massive restructuring effort, but continues to wrestle with the effects of a tough PC environment. HP's Personal Systems revenue was down 11% year over year during its third quarter. The company also announced changes to its leadership team last month, with Chief Operating Officer Bill Veghte becoming executive vice president and general manager of the company's Enterprise Group, and Dave Donatelli, who previously led the group, taking on a new role identifying early stage technologies. "After initial progress in its turnaround, HP is finding the going tougher as reflected in Meg Whitman backing off on the prospect of revenue growth in F14," wrote Milunovich. "Recent management changes will take time to have a positive impact." Lifted by positive sentiment toward HP's turnaround potential, the company's shares rallied significantly this year, but have slumped more than 14% since it reported its third-quarter results. HP, along with Alcoa (AA) and Bank of America (BAC), was recently dropped from the Dow, underlining the company's ongoing challenges. Like an oil tanker captain attempting to perform a U-turn, Whitman faces a Herculean task breathing new life into the one-time Silicon Valley icon. This task is made even more difficult by a harsh competitive landscape where HP's PC business remains under intense pressure from the likes of Apple's (AAPL) iPad. Tech research firm IDC earlier this week forecast that tablet shipments will surpass total PC shipments in the fourth quarter of 2013, and annually by 2015. --Written by James Rogers in New York. Follow @jamesjrogers >Contact by Email.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV