Hewlett-Packard Company (NYSE:HPQ) – Wait And Watch

It is not a great time for Hewlett-Packard Company (NYSE:HPQ) as four patents of the company has been invalidated by a federal judge in California for being too abstract. A competitor, ServiceNow Inc. was accused of infringing 8 software patents last year, patents related computer network management. The stock price of the company hit a new 2015 low in response to the court decision.

Have analyst identified a strong buy signal for HPQ?

A US Supreme Court decision, made in 2014, stating that too abstract or too basic an idea may not be eligible for any legal protection, has been very influential in the software related cases in the recent times and the Hewlett-Packard Company (NYSE:HPQ) case has turned out to be just another example of the perils many patents are facing.

HPQ

In spite of these issues, UBS Securities has recommended “buy” as the analysts think the downside risk may be limited. The impending spilt of Hewlett-Packard Company (NYSE:HPQ) in two separate entities by the year end has been taken as an excellent growth opportunity by many and the Enterprise side looks promising.

The technical view is mixed at this point, with a slight bias towards weakness. The bear market of 2010-12 registered a bottom in end 2012, which was followed by a nice rally for the next 2 years. The entire rally was not only contained inside a perfect channel, the two corrections punctuating the rise came out to be very similar in magnitude. The current drop in this calendar year is not only the largest in the last two and half years, the long term channel has also broken down, suggesting the end of the uptrend at worst or a sideways phase at best.

For the moderately bullish possibility of a sideways range to survive, the support band of $30-32 must show strong buyers. Investors may wait and watch for some time before taking a decision.

About the Author

Laurie, a long-time member of the US Markets Daily general assignment reporter who has covered a variety of subjects from breaking news to investigative features, from stock markets to politics, and from neighborhood small business to global warming.

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