Goldman Sachs Downgrades Hewlett-Packard (HPQ) to Sell

Goldman Sachs downgraded Hewlett-Packard (NYSE: HPQ) from Neutral to Sell with a price target of $16.00, suggesting 31% downside. The firm said sentiment has moved ahead of reality.

In its downgrade, Goldman said EPS expectations could face downward revisions in coming quarters and that any recovery in earnings power will be muted through FY2014. They also said any positives from restructuring will be largely countered by incremental weakness in PCs, enterprise hardware, services and printing. Lastly, Goldman said the company needs to reinvestment to grow and this could pressure profits and require more aggressive M&A beyond FY2013.

The firm sees 2013 revenues and EPS of $113.19 billion and $3.26 versus $113.37 billion and $3.32 previously and consensus of $113.42 billion and $3.51. For FY2014, they are looking for revenues and EPS of $110.33 billion and $3.36,
down from $110.64 billion and like EPS; this compares to consensus of $111.73 billion and $3.58.

For an analyst ratings summary and ratings history on Hewlett-Packard click here. For more ratings news on Hewlett-Packard click here.

Shares of Hewlett-Packard closed at $23.31 yesterday.

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