Whitmore observes that HP shares have rallied on speculation that Carl Icahn could take a stake in the company and potentially boost the pressure on the company to break up the company. (HPQ has said it has not been in conversation with Icahn and isn’t aware that he owns HPQ shares.)
But Whitmore doesn't think a break up would make sense.
"We believe HP is better served remaining whole due to significant cross business unit synergies, branding leverage, corporate overhead leverage and other associated scale advantages," he writes. "Ultimately, we believe 2 'mini HPs' would be less competitive and cede market share at a faster rate than the current unified structure and our preliminary [sum of the parts] analysis suggest a breakup would destroy value. As a result, we believe the recent speculation around breaking HP up will dissipate and the associated stock rally resulting from this speculation will fade."
Whitmore maintains his Sell rating on the stock, pointing to "weakening fundamentals, high exposure to declining product areas, share loss and challenging macro conditions."
HP this morning is down 14 cents, or 0.9%, to $14.62.
