A slew of brokerages cut their price targets on Hewlett-Packard Co. stock, saying the weak economy will continue to weigh on the company that has been plagued by operating problems and slow growth in its computers and printers businesses.
HP warned of an unexpectedly steep earnings slide in 2013 on Wednesday, with revenue set to fall in every business division except software.
Shares of the company fell about 4 percent to $14.26 on Thursday morning. They fell 13 percent to a nine-year low on Wednesday.
Analysts expect the company's revenue and margins to falter, increasing uncertainty about its recent strategic decisions which focus on transforming the former industry powerhouse into an enterprise computing corporation that can take on IBM and Dell Inc.
"HP's assumption of turning around the enterprise services business within one-two years looks aggressive, given the significant revenue decline and margin deterioration expected in fiscal 2013," BMO Capital Markets analyst Keith Bachman said.
Bachman, who cut his price target on HP's stock by $5 to $18, is a five-star rated analyst due to his earnings accuracy on HP, according to Thomson Reuters Starmine.
CEO Meg Whitman has said HP's recovery will become visible only in fiscal 2014 as investments begin to pay off.
The company said revenue from enterprise services, which accounted for over 20 percent of its revenue last year, will decline 11 to 13 percent in fiscal 2013 as four major customers are reducing their business with HP.
"Both PCs and printing are likely to be hurt by end users refreshing smartphones and tablets two-three times before refreshing a PC or printer," J.P. Morgan analyst Mark Moskowitz said.
Moskowitz cut his price target to $19 from $22 and said he does not expect much investor attention in the near future.
He recommended investors to avoid positions in HP and buy Apple Inc., EMC Corp., IBM Corp. and NetApp Inc. in these uncertain times.
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