An analyst cut his target for Hewlett-Packard Co.'s stock price on Wednesday, blaming uncertainty about HP's direction after the ouster of its CEO and investors' damaged confidence in the strength of the economic recovery.
Shaw Wu of Kaufman Bros. now expects HP shares to rise to $51 over the next 12 months, down from his earlier estimate of $61.
He said the change reflects "our concerns with its CEO transition as well as lower market trading multiples due to lower investor confidence in a sustained macroeconomic recovery."
HP shares rose 63 cents, or 1.5 percent, to $41.45 in afternoon trading Wednesday. The company's market value has dropped by more than $10 billion since CEO Mark Hurd's sudden resignation August 6.
Hurd was forced out over falsified expense reports connected to a former HP marketing contractor who accused him of sexual harassment. HP found that Hurd didn't violate HP's sexual harassment policies.
Wu said replacing Hurd, who ran HP for 5 years, "will not be easy" and that the search for his replacement will weigh on the stock.
There likely won't be any big surprises in HP's fiscal third-quarter results, since HP previewed the numbers when it announced Hurd's ouster.
HP' said it earned net income of 75 cents per share, or $1.08 per share excluding items, which was a penny better than analysts were expecting. Revenue rose 11 percent to $30.7 billion, which also was slightly higher than analysts' expectations.
Wu said a key question will be how HP hit its numbers. Hurd was praised on Wall Street for extensive cost cutting, but in recent quarters the company has gotten tougher questions about how it plans to grow beyond cuts and acquisitions.
Wu said personal computers, servers and printers should be areas of strength, while services are expected to have been weak.
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