RBC Capital’s Amit Daryanani this morning raised his rating on shares of Hewlett-Packard (HPQ) to Outperform from Market Perform after meeting with recently installed CEO Meg Whitman. Daryanani has a $32 price target on the stock.
“We walked away comfortable with Ms. Whitman�s strategy and believe her focus is making HP successful with the assets it has rather than implementing another transformation strategy,” writes Daryanani.
Daryanani thinks the new target for earnings, “at least $4” per share, set by Whitman a week ago, is a reasonable target that the company “has sufficient room to achieve,” with better-than-expected revenue growth, some operating expense savings, stock buybacks, and an improvement in lingering issues at the imaging and printing group (IPG).
On the last point, HP is trying to work down inventories that did not meet with sufficient demand. Daryanani thinks that can be resolved by the second half of next year, when the division can again have 14% operating margin.
HP shares this morning are up 24 cents, or 0.9%, at $26.77 in morning trading.
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