Maxim Starts Hewlett-Packard At Hold, Prefers HP Inc. To HP Enterprise

In a report issued Monday, Maxim analyst Nehal Chokshi initiated coverage on shares of Hewlett-Packard Company HPQ with a Neutral rating and $34.00 12-month price target.

Shares were down about 0.6 percent.

The company is in the process of breaking up into HP Inc. (HPI: PCs + Printers) and HP Enterprise (HPE: Enterprise Hardware & Services). The split will become effective in November, but the experts don't expect it to unlock shareholder value. They anticipate HP Inc. will stand as a more attractive investment option than HP Enterprise.

Related Link: Credit Suisse Cuts HP PC Numbers On 'Weak Global Demand,' But Still Likes Stock

According to the research note, Maxim’s proprietary data leads to the conclusion that PCs can generate earnings upside of up to $0.39 per share, justifying the firm’s vision that HP Inc. is the most attractive investment option. However, the analysts highlight a few negatives:

• Lenovo Group Limited (ADR) LNVGY competitive position in the enterprise segment continues to ameliorate. Given this situation, the firm sees an earnings downside risk of $0.25 per share in HP's Enterprise Group for fiscal 2016.
• "Software Defined Data Centers Put Incremental Pressure on Enterprise Services, yielding a temporary $0.17 EPS headwind” – or 4 percent decline.
• Recent data points suggest that printing remains in secular decay. This represents “up to a $0.14 FY16 EPS headwind,” the report assures.