NEW YORK (TheStreet) -- Shares of Hewlett-Packard (HPQ) are getting a boost, higher by 1.9% to $38.03 in early market trading on Wednesday, after the computer hardware company had its price target raised to $46 from $40 by analysts at Citigroup this morning.
Analysts at the firm maintained its "buy" rating on shares, citing its "non-consensus view" that PCs will grow again in the next two-to-three years.
The firm said they increased its price target on the tech giant after transitioning to a sum-of-the-parts valuation model with the company's break up in less than 12 months.
Citigroup noted that its new price target reflects the potential value of HP's software and services businesses.
Separately, TheStreet Ratings team rates HEWLETT-PACKARD CO as a Hold with a ratings score of C+. TheStreet Ratings 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, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, HPQ's share price has jumped by 42.53%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- HEWLETT-PACKARD CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, HEWLETT-PACKARD CO's EPS of $2.62 remained unchanged from the prior years' EPS of $2.62. This year, the market expects an improvement in earnings ($3.95 versus $2.62).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Computers & Peripherals industry average. The net income has decreased by 5.9% when compared to the same quarter one year ago, dropping from $1,414.00 million to $1,330.00 million.
- Net operating cash flow has declined marginally to $2,701.00 million or 4.08% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: HPQ Ratings Report