In a report published Friday, Bank of America analyst Wamsi Mohan reinstated coverage on Hewlett-Packard Company (NYSE: HPQ) with a Buy rating and $47.00 price target.
In the report, Bank of America noted, “We are reinstating coverage with a Buy rating and PO of $47 (11x our C16E EPS of $4.26) as (1) the impending split into HP Inc. and Hewlett-Packard Enterprise makes it attractive for investors to own the stock before the transaction occurs in F15 for the optionality to later continue to own one or both of these pieces (two very different markets, strategies, capital structures and shareholder returns policy); (2) our sum-of-the-parts (SOTP) analysis (Figure 5) shows that the enterprise value of the separate companies added together is worth more than that of the combined enterprise; and (3) multiple should expand on significant leverage from further cost cutting (esp. in Services). In our view, the current valuation is attractive at 9x C16E EPS (6x ex cash).”
Hewlett-Packard closed on Thursday at $38.47.
Latest Ratings for HPQ
| Dec 2014 | Bank of America | Reinstates | Buy | |
| Oct 2014 | Jefferies | Initiates Coverage on | Hold | |
| Oct 2014 | Brean Capital | Maintains | Buy |
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