J.P. Morgan Tech Tuesday Upgrades

J.P. Morgan analyst Mark Moskowitz upgraded Hewlett-Packard Company (NYSE: HPQ), Seagate Technology Public Limited Company (NASDAQ: STX), and Western Digital Corporation (NASDAQ: WDC) today. Overview:

• Moskowitz upgraded Hewlett-Packard Company from Neutral to Overweight and raised the price target from $30.00 to $35.00.
• The analyst upgraded Seagate Technology from Underweight to Neutral and increased the price target from $36.00 to $55.00.
• J.P. Morgan upgraded Western Digital from Neutral to Overweight and significantly raised the price target from $56.00 to $100.00.

Specifics Points On HPQ:

• Moskowitz wrote that PC and printing declines are easing as market conditions stabilize and slight improvements in printing market dynamics "stand to have an outsized impact on HP's model."
• The analyst added that Enterprise Group still has challenges, but an internal focus and help from Dell with "aggressive discounting" will benefit cash flow.
• J.P. Morgan noted concerns with mixed performance in its service business after acquiring EDS.
• The analyst noted that Hewlett-Packard FY14 free cash flow could reach $8 billion compared with HPQ's estimate of $6-6.5 billion.

Specific Points on STX and WDC:

• J.P. Morgan's research describes that the "rate of change away from HDDs to Flash-based storage in PCs, servers, and storage is not accelerating as previously feared." Moskowitz specifically noted that HDD upgrades driven by "sustainable" industry cost discipline and the PC market bottoming should boost Seagate and Western Digital revenue.
• Moskowitz commented, "Our research suggests WD has not been starving capital investments in next-gen HDD or flash-based technologies. WD has begun to assemble a flash portfolio, while also investing in highcapacity enterprise and ultra-thin HDD consumer products."
• The analyst prefers Western Digital over Seagate as Seagate's flash strategy is lacking and J.P. Morgan expects Western Digital to take market share in enterprise HDDs from Seagate.