HP, Dell shares sink as tech spending jitters persist

SAN FRANCISCO (BestGrowthStock) – Shares of Hewlett-Packard Co (HPQ.N: ) and Dell Inc (DELL.O: ) slid on Friday, as Wall Street analysts chopped price targets on the largest U.S.-based PC makers after their earnings reports.

On Thursday, HP and Dell reported strong demand from commercial customers for technology hardware, along with some signs of weakness in their consumer businesses.

Despite largely upbeat commentary about enterprise spending, investors remained jittery about the broader economy and demand for technology products. Wall Street analysts lowered price targets on HP and Dell to reflect a broader contraction in valuations in the sector.

Shares of HP fell as much as 3.5 percent on the New York Stock Exchange to a new 52-week low of $39.33, as investors continued to pull back amid uncertainty over the company’s leadership search.

HP shares have fallen around 14 percent since Mark Hurd’s surprise resignation as chief executive on August 6.

BMO Capital Markets analyst Keith Bachman said HP’s shares look cheap, but said the leadership vacuum is keeping buyers at bay.

“We think investors will take a wait-and-see attitude until HP announces a new leader, despite good performance on an easy set-up for the October quarter,” Bachman wrote in a research note.

HP reported a 6 percent rise in profit in its fiscal third quarter, and an 11 percent climb in sales, led by good demand for servers, PCs and printers.

“While investors are rightly concerned about the company’s future given the vacated CEO position, last night’s quarterly results clearly show that HP’s operations are running at a very high level,” Raymond James analyst Brian Alexander said in a research note.

Dell beat Wall Street’s profit and revenue estimates in the fiscal second quarter and said it expected demand for PCs among corporate customers to remain steady in the coming months.

But the company’s gross margin missed Wall Street’s target, a problem that has plagued the company in recent quarters. Dell, the world’s No. 3 personal computer maker, has been struggling to improve profitability, even as it grapples with falling PC prices

RBC Capital Markets, Raymond James, Citigroup and BMO all cut price targets on Dell.

“(The: ) commercial refresh cycle continues to benefit revenue, but the consumer segment’s profitability continues to more than offset this positive dynamic,” RBC analyst Amit Daryanani wrote in a note.

Dell shares were down 0.5 percent in early afternoon trading on the Nasdaq. The company’s stock is down around 15 percent this year.

(Reporting by Gabriel Madway, editing by Matthew Lewis)

HP, Dell shares sink as tech spending jitters persist