Although there were snippets of good news in HP’s third-quarter results last night, that was overshadowed by the bad stuff.So, not surprisingly, today a bunch of analysts have cut their target prices for the stock.
This includes Barclays ($21 from $22), RBC ($25 from $27), Baird ($22 from $23), Jefferies ($17 from $21), Evercore Partners ($19 from $20), and FBN Securities ($22 from $25), reports Jim Cunningham on Schaeffer’s Investment Research’s blog.
The average 12-month price target for the stock is now $25.73. But that’s still a a 34% premium to Wednesday’s closing price of $19.20, notes Cunningham.
Investors are not so optimistic. stock is struggling today, trading at just under $18 now, close to its 52-week low of $17.41, hit earlier this month.
Analysts cited several reasons for the downgrade especially a lot of worry over HP’s PC business, particularly how consumers are shifting from PCs to tablets. HP will have a Windows 8 tablet aimed at enterprises, and it has Windows 7 tablets now, but it has yet to announce a strategy for a Windows 8 tablet for consumers.
“HPQ posted a solid quarter and essentially in-line guidance. However, concerns with its quality of earnings given the large amount of restructuring charges and negative tone on its conference call unfortunately overshadow the considerable improvement made in its balance sheet,” explained Sterne Agee analyst Shaw Wu in a research note today.
Wu also pointed out the good news, which included solid $1 earnings per share. Analysts had expected 98 cents. Software, an important part of HP’s business, grew 18% in year over year. And HP reduced its debt by $3 billion in the quarter.