Hewlett-Packard Co <HPQ.N> shares are set to open more than 4 percent higher after better-than-expected quarterly results that prompted at least six brokerages to raise price targets on the stock, although analysts said problems at the world's No.1 PC maker were far from over.
HP on Thursday reported second-quarter results and forecasts above Wall Street expectations as it cut costs under Chief Executive Meg Whitman's turnaround plan in the face of falling PC sales and slowing corporate IT spending.
"Although a number of businesses remain under pressure, the company's blocking and tackling is improving, and the likelihood of the bottom falling out appears diminished," UBS Investment Research analyst Steven Milunovich said in a note.
Milunovich upgraded his rating on the company to "neutral" and raised the price target on the stock to $17 from $12.
HP, like other PC makers, has been hammered as consumers turn to tablets and other mobile devices. In addition, the company has suffered internal turmoil with a failed spin-off attempt, a botched acquisition and two CEOs losing their jobs.
HP shares, trading at $17.90 before the bell on Friday, have gained around 20 percent since the beginning of the year, helped partly by a buyout offer for rival Dell Inc . They closed at $17.1 on Thursday on the New York Stock Exchange.
J.P. Morgan Securities analyst Mark Moskowitz, who raised his price target on HP stock by $1 to $22, said the company's results and outlook signaled that the worst may be over, but added that there was room for plenty of work to be done.
Whitman, who took over the reins at HP over a year ago, plans to cut an estimated 29,000 jobs, or about 10 percent of the workforce, over the next two years. She has also reversed a decision to spin off HP's PC division.
Jefferies & Co, RBC Capital Markets, Evercore Partners and BMO Capital Markets also increased their price targets on the PC maker's stock.
(Reporting by Himank Sharma in Bangalore; Editing by Rodney Joyce and Ted Kerr)