REUTERS - Hewlett-Packard Co shares rose as much as 10 percent on Friday after the company's better-than-expected quarterly results and forecasts prompted at least eight brokerages to raise price targets on the stock, although analysts said problems at the world's No.1 PC maker were far from over.
HP's upbeat outlook comes as the company cuts costs under Chief Executive Meg Whitman's turnaround plan in the face of falling PC sales and slowing corporate IT spending.
"Although a number of businesses remain under pressure, the company's blocking and tackling is improving, and the likelihood of the bottom falling out appears diminished," UBS Investment Research analyst Steven Milunovich said in a note.
Milunovich upgraded his rating on the company to "neutral" and raised the price target on the stock to $17 from $12.
HP shares were up 9.6 percdnt at $18.73 in early trading after hitting a hight of $18.84.
HP, like other PC makers, has been hammered as consumers turn to tablets and other mobile devices. In addition, the company has suffered internal turmoil with a failed spin-off attempt, a botched acquisition and two CEOs losing their jobs.
HP shares have outperformed all other Dow Jones Industrial Average constituents this year. Before Friday's gains, they were up about 20 percent since the beginning of the year, helped partly by a buyout offer for rival Dell Inc.
J.P. Morgan Securities analyst Mark Moskowitz, who raised his price target on HP stock by $1 to $22, said the company's results and outlook signaled that the worst may be over, but added that there was room for plenty of work to be done.
Whitman, who took over the reins at HP over a year ago, plans to cut an estimated 29,000 jobs, or about 10 percent of the workforce, over the next two years. She has also reversed a decision to spin off HP's PC division.
Eight brokers, including Jefferies & Co, RBC Capital Markets, Evercore Partners and BMO Capital Markets and Credit Suisse also increased their price targets on HP's stock by an average of $4.19.
Deutsche Bank's Chris Whitmore, raised his forecast on the company's shares based on improved earnings outlook, but has a $12 target -- well below HP's current valuation.
Whitmore rates HP a "sell" and said he remained negative, citing continued revenue losses and a weak economy.
"We remain concerned about ongoing weak printer unit shipments and the structural decline of this market, ongoing deterioration across the PC industry on both a unit and pricing basis, poor bookings performance and future contract losses in Services...", he said in a client note.
HP derived over 17 percent of its second quarter revenue from sales of printers, copiers and related services -- a business that has lately borne the brunt of slowing corporate spending.
(Reporting by Himank Sharma in Bangalore; Editing by Rodney Joyce and Ted Kerr)
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