Citi raised its price target on Hewlett-Packard Company HPQ Wednesday from $40 to $46 and maintained a Buy rating.
Analyst Jim Suva commented that with “HP set to break up the company in less than 12 months, we are transitioning to a sum-of-the-parts (SOTP) valuation methodology, which indicates a fair value of $46.
“This is compared to our previous target of $40 based on a straight multiple of 10x P/E for the overall company. The primary reason why the SOTP valuation is higher is because it properly reflects the potential value of HP's software and services businesses—something that has been a challenge due to investor perception that HP is mostly a declining PC/printing company.”
Suva contended “that HP will be a share gainer over the long-term as we will continue to see smaller players exit the market. We are already modeling HP to grow above the market in FY15.”
Hewlett-Packard Company recently traded at $38.54, up 3.27 percent.
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