Why this HP Analyst Remains Skeptical Even After Warren Buffett’s $4.2 Billion Investment

Why this HP Analyst Remains Skeptical Even After Warren Buffett’s $4.2 Billion Investment
The HP logo is displayed on the entrance to the Hewlett-Packard Headquarters in Palo Alto, Calif.,. Justin Sullivan/Getty Images
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HP Inc. shares rallied Thursday after Warren Buffett’s Berkshire Hathaway Inc. revealed a new 121-million-share stake in HP worth about $4.2 billion.

In a new filing, Berkshire said it now holds roughly an 11 percent ownership stake in HP, a major vote of confidence from one of the most famous and successful investors of all time.

Bull & Bear Case

On Thursday, Bank of America analyst Wamsi Mohan said Buffett is likely focused on HP’s attractive valuation, free cash flow profile and strong capital return program. Yet Mohan said there are plenty of points to the HP bear case as well.