NEW YORK (TheStreet) -- Stronger-than-expected earnings at Hewlett-Packard (HPQ) sparked a rally across the tech sector on Wednesday as IBM (IBM) and Intel (INTC) traded higher along with supplier Atmel (ATML) and Micron Technology (MU). By early afternoon, HP had surged 7.8% to $27.05, IBM was up 1.1% to $179.32, Atmel gained 2.2% to $7.70 and Micron Technology climbed 2.1% to $20.73.
Intel lagged the bunch, edging 0.6% higher to $23.78. Appetite for the stock was tempered after RBC Capital cut its rating to "sector perform" from "outperform" and revised its price target to $26 from $27. The investment firm said the company's return on investment doesn't justify its more-than-$2-billion annual spend on increasing tablet and handset market share.
HP impressed analysts with its fourth-quarter earnings of $1.01 a share, beating Thomson Reuters estimates by a penny. Revenue of $29.1 billion, though 3% lower than the year-ago quarter, was $1.19 billion above consensus.
TheStreet Ratings team rates Hewlett-Packard Co as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate Hewlett-Packard Co (HPQ) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins."
- You can view the full analysis from the report here: HPQ Ratings Report