Josephthal downgraded its rating on Hewlett-Packard (HWP) to hold from buy and cut its $1.73 fiscal 2001 EPS estimate to $1.60.
Analyst Lawrence Borgman says Q1 estimates are in line with H-P's lowered guidance. Borgman says fiscal 2001 (Oct.) revenue growth is likely to be limited to less than 5%, with a great deal of uncertainty regarding H-P's international outlook. He says most of the company's businesses are facing strong competition, and there are few breakaway technologies of sufficient size to overcome cyclical influences. Borgman says H-P's execution has been an issue in recent quarters, and he expects turmoil within H-P until the company's management feels comfortable with its strategic positioning. He notes H-P's valuation is "no bargain."