Hewlett-Packard Selloff: 'Slap or Trap,' Citi Asks

In the midst of a more than 6 percent selloff in Hewlett-Packard Company HPQ, Citi Research asked whether this is just a “slap on the wrist” or a “trap for investors.”

Citi's verdict: a slap on the wrist.

The analysts urged investors to look past the immediate EPS adjustment and disappointing free cash flow forecast and to the breakup of the company into two segments: HP Inc. and Hewlett-Packard Enterprises. Specifically, the analysts noted that Wednesday's price decline is an “attractive entry point for those looking to own the stock for the break-up.”

Citi also said that most of HP’s operating segments “continue to perform well or at least make progress,” which also will add support for the stock’s price. The analysts noted that the currency headwinds are near-term problems, ending in 2016.

Despite a positive outlook, Citi lowered its price target by $1 to $45 and reiterated its Buy rating.