3 Analysts Look Past Hewlett-Packard Earnings, Reiterate Ratings

Hewlett-Packard Company HPQ reported a weaker quarter and disappointing guidance Tuesday night, sending the stock more than 6 percent lower in pre-market trading. But that negativity is not translating into three analyst reports from Citi Research, Morgan Stanley and JP Morgan, which all reiterated Buy or Overweight ratings.

Citi said that it believes the pre-market decline is just a “slap on the wrist” as a result of lower financial expectations, instead of being a trap for investors. The company set a $45 price target on the stock, down $1 from a prior $46. The firm’s target was based on a “sum-of-the-parts” analysis, which captures the company’s post-breakup value.

Analysts at JP Morgan have looked past the immediate declines in free cash flow and revenue guidance and to the company’s split, which is still on track for year-end. With the stock trading around $36 in the premarket, JP Morgan reiterated its Overweight and $38 price target.

Morgan Stanley also analyzed the value of Hewlett-Packard post-breakup, with the firm expecting the company’s headwinds to reverse in 2016 leading to a better valuation for both HP Inc. and Hewlett-Packard Enterprises. Morgan Stanley placed a price target of $44 and an Overweight rating.