UPDATE 1-JP Morgan raises price targets on HP, Dell

Aug 13 (Reuters) - J.P. Morgan Securities raised its December 2010 price target on the shares of Hewlett-Packard Co (HPQ.N), saying the company's diverse business model should position it as a relatively early beneficiary of any macro-driven replacement cycle.

The brokerage raised its price target on HP's stock to $49.50 from $40, and said in a note to clients the company's second-quarter revenue will be helped by foreign currency effects and better-than-expected trends in personal computers.

JP Morgan has an "overweight" rating on the company's stock.

The brokerage said it expects general expense management, coupled with long-awaited benefits from the PC maker's imaging and printing cost actions to prop up operating margins.

JP Morgan also raised its December 2010 price target on computer maker Dell Inc's (DELL.O) shares to $13 from $10, citing general improvement in valuation multiples within the broader equity markets.

The brokerage, which has an "underweight" rating on the stock, however, said it is cautious on the company's incremental operating leverage potential and does not expect any positive developments out of its August 27 earnings call.

"Both Dell's high PC exposure and lack of a transformative acquisition to diversify the revenue streams prevent us from becoming more constructive on the stock," the brokerage said in a separate note to clients.

The brokerage lowered its revenue estimate for Dell's October quarter to $12.89 billion from its earlier estimate of $12.95 billion.

Shares of HP were up 14 cents at $44.32 Thursday morning on the New York Stock Exchange, while those of Dell were up 23 cents at $14.07 on Nasdaq.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Unnikrishnan Nair)

((saqib.ahmed@thomsonreuters.com; within US +1 646 223 8780; outside U.S +91 80 4135 5800; Reuters Messaging saqib.ahmed.reuters.com@reuters.net)) Keywords: HEWLETTPACKARD/RESEARCH JPMORGAN

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