Personal computer and printer maker HP Inc. (HPQ) on Thursday saw its shares spike after beating Wall Street's fiscal first-quarter targets. Meanwhile, wearable fitness device maker Fitbit (FIT) appeared to calm investors with Q4 results that came within its lowered guidance range.
At least seven Wall Street analysts raised their price targets on HP stock after the company's Q1 report late Wednesday. But of those seven, five reiterated neutral or equivalent ratings on the stock. Two were bullish: FBN Securities and Morgan Stanley.
FBN analyst Shebly Seyrafi upgraded HP stock to outperform from sector perform and raised his price target to 19 from 15. Morgan Stanley analyst Katy Huberty reiterated her overweight rating on HP stock and upped her price target to 19 from 16.
IBD'S TAKE: HP stock has an IBD Composite Rating of 67, meaning it has outperformed 67% of stocks in key metrics over the past 12 months. But it ranks No. 5 out of 14 stocks in IBD's Computer-Hardware and Peripherals industry group. To see which companies lead the group, visit the IBD Stock Checkup.
HP broke out of a nine-week cup base with a buy point of 16.35 on Thursday. Shares of the Palo Alto, Calif.-based company rose as much as 9.9% to a two-year high of 17.80 in intraday trading on the stock market today. HP stock closed the session at 17.60, up 8.6%.
Seyrafi turned positive on HP because of the company's solid execution and "excellent free cash flow metrics." HP PC sales are benefiting from innovative products and its printer supplies business is showing signs of stabilization, he said in his research report.
Patrick Moorhead, an analyst with Moor Insights & Strategy, said HP's PC business is benefiting from consolidation in the market, which has left three big vendors: Lenovo, HP and Dell Technologies (DVMT). HP also was smart to shift to premium Windows PCs in the consumer and commercial markets, he said in a report.
Fitbit Gets Relief Rally
Fitbit stock rose on Thursday after its December quarter report was better than feared. Fitbit shares rose 3.2% to 6.07 Thursday.
Most analysts maintained a cautious tone on the stock, which has been hammered by slowing sales of wearable fitness devices.
Cowen analyst John Kernan reiterated his market perform rating on Fitbit, but cut his price target to 7 from 9.
"Guidance for 2017 implies weak sales, down 26% year over year at the midpoint, additional gross margin contraction and expense management," Kernan said.
While Fitbit leads the fitness tracker market, it has been ceding share to Garmin (GRMN) and other brands, he said in a report.
On Wednesday, Garmin reported better-than-expected Q4 results thanks to strong wearable device sales.
Fitbit management is focused on entering the smartwatch market now, leveraging its learnings from the Fitbit Blaze fitness watch and its recent acquisitions, including Pebble. But the company will face tough competition from Apple (AAPL) and others in the smartwatch business, Piper Jaffray analyst Erinn Murphy said in a report. She rates Fitbit stock as underweight with a price target of 5.
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