Morgan Stanley Keeps Overweight Rating, $34 Target on HP Amid Earnings

Morgan Stanley released a note following Hewlett-Packard's HPQ fourth quarter results. Analyst Katy Huberty rates the stock Overweight with a price target of $34. Huberty said, “HP has a two year head start on transforming and restructuring its business to meet the demands of a cloud world.” Investments in Ink in the Office, Chromebooks, 3Par storage, and Vertica “are beginning to drive results while disruption post Dell going private and IBM selling x86 servers should help sustain recent revenue growth in Enterprise Group and PC's,” says the analyst. Operating margins of 10-11 percent “unlikely in the medium-term, as secular shifts away from PC's, printers, branded servers and IT outsourcing weigh on margins,” according to Huberty. Shares opened at $30.62, but have moved sharply lower to $29.75 this morning.