UBS Upgrades Hewlett-Packard Despite 'Weak Portfolio'

Analysts at UBS upgraded Hewlett-Packard Company HPQ following its recent share price decline, slapping a $40 price target on the company. That was where the stock was trading in January before quarterly earnings saw the stock decline by nearly 20 percent.

Using a sum-of-the-parts valuation, UBS prices Hewlett-Packard at $43, calling the price "conservative." The analysts expect that the separation of Hewlett-Packard into two companies will help unlock some of this value. That said, the analysts look at the company not from a strong fundamental basis, but from a risk-reward perspective. That risk-reward perspective, UBS said, is particularly favorable with recent underperformance.

Interestingly, the analysts said that Hewlett-Packard has a "weaker portfolio" compared with International Business Machines Corp. IBM, but that the portfolio is an opportunity for shareholders as opposed to a drag.