Hewlett Packard (NYSE: HPQ) Stock Price Prediction After the Company Split

TechnologyNow that Hewlett-Packard Co. has completed its company split, investors are asking what's next for the HP Inc. (NYSE: HPQ) stock price.

HPQ debuted as an independently traded entity Monday to a warm reception. Shares soared 13% to $13.83. Its other half, Hewlett Packard Enterprise (NYSE: HPE), fell 1.6% to $14.49.

HPQ will handle HP's legacy business, while HPE will sell software, servers, storage, and networking services.

The first day stock moves were not surprising to company officials.

"I expected a lot of volatility in the next couple of weeks," CEO Meg Whitman, who pushed for the split, told Bloomberg. "Probably by the end of November, we'll have a pretty good read on, you know, what is the market assessing the value of each company."

Each spin-off is estimated to produce more than $50 billion in sales in 2016. Whitman said the new companies will be nimble, independent companies that can more easily pursue customers with increased innovation and focus.

HPQ's printer and personal computer (PC) business remains a "cash flow machine" that's not going away, according to IDC analyst Crawford Del Prete.

And there are fresh signs the sputtering PC industry is stabilizing. HPQ was the No. 2 player in the space in Q3 with 18.5% of shipments. That was up from 17.8% a year earlier, Gartner Inc. data shows.

According to Gartner's 2015 personal technology survey, 50% of consumers expressed intention to purchase a PC in the next 12 months, compared with 21% for tablet purchase intention.

And that growth bodes well for the HPQ stock price...

What HPQ Stock Price Predictions Show Now

"The split will be good," Paul Teich, principal analyst at high-tech research and advisory firm Tirias Research, told USA Today. "It will allow them to focus on product development, infrastructure software and help redefine (PCs and printers). They can legitimize 3D printing, for example."

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After the HP company split, many analysts have tweaked their HPQ stock price predictions. Here are some of the more notable predictions:

  • Bernstein initiated HPQ with an "Outperform."
  • Credit Suisse also initiated HPQ with "Outperform" rating and $19 price target.
  • Needham initiated HPQ with a "Buy" rating and $14.50 price target. The firm acknowledges that HP's split leaves two businesses facing muted growth and secular declines in their respective markets and says more cost-cutting will be necessary for HPQ to return to robust growth.
  • Monness Crespi & Hardt maintained a "Buy" rating on HPQ with new $14 price target. The firm says the HPQ stock price looks attractive for value and income investors.
The Bottom Line: At $13.90, the HPQ stock looks inexpensive, trading at a price/earnings (PE) multiple of 5.73. Its 5% dividend yield is another bonus for investors. With improvements in the PC market expected starting in Q4 and stretching into 2016, HPQ stands to benefit. Analysts have modest HPQ stock price predictions now.

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