UPDATE: Bank of America Reinstates Coverage on Hewlett-Packard Company with Buy Rating, $47 PT on Unlocking Value by Splitting Into Two

In a report published Friday, Bank of America analyst Wamsi Mohan reinstated coverage on

with a Buy rating and $47.00 price target. In the report, Bank of America noted, “We are reinstating coverage with a Buy rating and PO of $47 (11x our C16E EPS of $4.26) as (1) the impending split into HP Inc. and Hewlett-Packard Enterprise makes it attractive for investors to own the stock before the transaction occurs in F15 for the optionality to later continue to own one or both of these pieces (two very different markets, strategies, capital structures and shareholder returns policy); (2) our sum-of-the-parts (SOTP) analysis (Figure 5) shows that the enterprise value of the separate companies added together is worth more than that of the combined enterprise; and (3) multiple should expand on significant leverage from further cost cutting (esp. in Services). In our view, the current valuation is attractive at 9x C16E EPS (6x ex cash).” Hewlett-Packard Company closed on Thursday at $38.47.