Hewlett-Packard (HPQ) Stock Could Find Higher Value With A Break-UpVW Staff
After last week’s round of bad news for the company, there may now be one bright spot for Hewlett-Packard Company (NYSE:HPQ). By splitting up the company, it could bring a higher value for the share price.
A least one analyst believes this to be true.
UBS analyst Steven Mulinovich shared this view on Monday, while on CNBC’s “Fast Money”, noting, “We’re really trying to put a stake in the ground this time, though, and say that it’s just increasingly making too much sense.”
Should the company break up its divisions, Mulinovich thinks the share price could add $5 to its value. The stock is current trading at $14.57.
Mulinovich explained that upon performing an analysis on Hewlett-Packard Company (NYSE:HPQ), “it suggests the company is worth north of $20 per share”, but added it is undergoing management challenges and it is an “eroding brand.”
He said, “Basically, the worst parts of the business are dragging the better ones down. So while there’s no silver bullet, we still think at the end of the day it’s going to be worth more broken up than whole.”
Last week Hewlett CEO Meg Whitman gave a gloomy earnings warning and the stock fell 8.5 percent in midday trading on Wednesday. The stock opened at $17.23 on that day and closed at $14.91 after the remarks.
Year-to-date, the stock is down 43.44 percent. When taking a looking at its competitors, Dell Inc (NASDAQ:DELL) is down almost 33 percent while International Business Machines Corp. (NYSE:IBM) is up almost 14 percent.
With these numbers, Virtus’ Joe Terranova noted that PC market growth was “horrible”, and Hewlett-Packard Company (NYSE:HPQ) differed from International Business Machines Corp. (NYSE:IBM) because it “saw the future. That’s why investors are rewarding IBM. HP, they can’t even see the present right now.”
Another pessimistic analyst for Hewlett is Stephen Weiss of Short Hills Capital. He’s not a buyer of the stock and said of it via CNBC, “I just think it’s a value trap, and it smells more like an Eastman Kodak — although not that bad — than it does of an IBM.”
So what’s next for the troubled company?
It may be somewhat of a waiting game and the belief in Whitman to turn things around. She has been with the company since September 2011.
Has it been a happy first year? Analysts are yet to see a clear strategy for the company and one option could leave Hewlett-Packard Company (NYSE:HPQ) as a target for different suitors.
Its rivals, including Big Blue,
After the earlier analyst’s remarks on Monday, the stock is down 1.49 percent, trading at $14.51.