* BMO, RBC, UBS, Evercore, JPM, Jefferies, Credit Suisse
raise price targets
* Shares rise as much as 11 percent in early trading
* Analysts still cautious amid PC downturn
Feb 22 Hewlett-Packard Co shares rose as
much as 11 percent on Friday after the company's
better-than-expected quarterly results and forecasts prompted at
least eight brokerages to raise price targets on the stock,
although analysts said problems at the world's No.1 PC maker
were far from over.
HP's upbeat outlook comes as the company cuts costs under
Chief Executive Meg Whitman's turnaround plan in the face of
falling PC sales and slowing corporate IT spending.
"Although a number of businesses remain under pressure, the
company's blocking and tackling is improving, and the likelihood
of the bottom falling out appears diminished," UBS Investment
Research analyst Steven Milunovich said in a note.
Milunovich upgraded his rating on the stock to "neutral" and
raised his price target to $17 from $12.
HP shares have outperformed all other Dow Jones Industrial
Average constituents this year. They closed at $19.20 on
the New York Stock Exchange on Friday, the highest since August
Before Friday's gains, the stock was up about 20 percent
since the beginning of the year, helped partly by a buyout offer
for rival Dell Inc.
HP, like other PC makers, has been hammered as consumers
turn to tablets and other mobile devices. Underscoring the
severity of the industry's woes, Dell on Tuesday reported a 31
percent drop in profit as sales fell in virtually every major
In addition, HP has suffered internal turmoil with a failed
spin-off attempt, a botched acquisition and two CEOs losing
J.P. Morgan Securities analyst Mark Moskowitz, who raised
his price target on HP stock by $1 to $22, said the company's
results and outlook signaled that the worst may be over, but
added that there was room for plenty of work to be done.
Whitman, who took over the reins at HP over a year ago,
plans to cut an estimated 29,000 jobs, or about 10 percent of
the workforce, over the next two years. She has also reversed a
decision to spin off HP's PC division.
She had last year warned of a tough 2013, with earnings set
to decline steeply, but said on Friday revenue growth is likely
to return in 2014.
Eight brokers, including Jefferies & Co, RBC Capital
Markets, Evercore Partners and BMO Capital Markets and Credit
Suisse also increased their price targets on HP's stock by an
average of $4.19.
But some analysts remained more skeptical than the others.
"While consensus will likely view the unchanged FY guidance
as conservative after a stronger-than expected H1, we continue
to see headwinds," Jefferies' Peter Misek said.
Deutsche Bank's Chris Whitmore, raised his forecast on the
company's shares based on improved earnings outlook, but has a
$12 target -- well below HP's current valuation.
Whitmore rates HP a "sell" and said he remained negative,
citing continued revenue losses and a weak economy.
"We remain concerned about ongoing weak printer unit
shipments and the structural decline of this market, ongoing
deterioration across the PC industry on both a unit and pricing
basis, poor bookings performance and future contract losses in
Services...", he said in a client note.
HP derived over 17 percent of its second quarter revenue
from sales of printers, copiers and related services -- a
business that has lately borne the brunt of slowing corporate
(Reporting by Himank Sharma in Bangalore; Editing by Rodney
Joyce, Ted Kerr, Sreejiraj Eluvangal)