Hewlett-Packard Company (NYSE:HPQ) On Hold Despite Deutsche Bank Buy Rating


Dallas, Texas 04/25/2014 (FINANCIALSTRENDS) – Hewlett-Packard Company (NYSE:HPQ) has a consensus “hold” rating despite one more new addition in the “buy” column as Deutsche Bank kicked off coverage for HPQ with a buy rating. Some of it may be a spillover effect of HP’s bribery scandal that has now been settled.

Analysts Split Over HPQ Rating

Analysts aren’t really in consensus over a rating or the price target for HP. There are 15 hold ratings and 13 buy ratings among analysts who cover HPQ, along with a solitary sell rating from Topeka Capital Markets. Goldman Sachs, which previously had HPQ in the sell column, switched to hold in February, and upped its price target from $21 to a whopping $37.

Note that Deutsche Bank initiated coverage with a price target of $40. Analysts for both Deutsche Bank and Goldman Sachs may be a tad bit optimistic, because a lot of the other major analyst ratings, including Zacks have HPQ’s price target pegged at around $35, give or take a dollar.

The consensus price target for the whole gaggle of analysts is lower at around $30, which represents a downside of more than 6%. The smart money, however, says there’s an upside and HPQ will be rising some more before it hits the real price target.

The DOJ/SEC Settlement

HP has a vast business spanning the globe, so single events limited to a region don’t have too much impact. However, this particular one is a bit different since it involves both the U.S. Department of Justice and the U.S. Securities and Exchange Commission.

HP has agreed to pay $ 108 million to these two U.S. government agencies to settle allegations of potential violations of the Foreign Corrupt Practices Act (FCPA). The company had been accused of bribing government officials in Poland, Mexico and Russia through subsidiaries in order to obtain or retain contracts.

This could have had a far worse outcome for HP, and the fact that the books will now be closed on the investigations means that HP can now focus on business growth instead of damage control.

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