Wells Fargo upgrades HP on earnings growth

LOS ANGELES (AP) -- Wells Fargo raised its rating on Hewlett-Packard Co. on Thursday, saying the computer maker doesn't need to post revenue growth in order to boost earnings. But shares still fell 2 percent, caught in a market-wide downdraft on fears of monetary tightening in the U.S.

Analyst Maynard Um upgraded HP to "Outperform" from "Market Perform" and raised the valuation range on the shares to $30 to $32, up from $23 to $25 previously.

Um's rating is eight times his estimate of earnings per share of $3.77 in fiscal 2014. That's up from the $3.59 per share in earnings he expected at the end of the current fiscal year, which ends in October.

Um said in a research note Thursday that HP can boost earnings by shifting the mix of products toward technologies that it owns outright and by cutting costs. It could also sell assets to reduce its debt. Um also said that there is potential upside if the PC market stabilizes.

HP shares fell 72 cents, or 2.8 percent, at $24.71 in afternoon trading. Shares are near the stock's 52-week high after rising off a low of $11.35 hit in November.