Ahead of the Bell: Analyst downgrades HP

NEW YORK - An analyst downgraded technology bellwether Hewlett-Packard Co. Thursday, citing reasons including slowing computer sales growth.

The stock fell 87 cents, or 2.4 percent, to $35.38 in pre-market trading.

Calyon Securities analyst Shebly Seyrafi cut his rating to "Reduce" from "Add," and lowered his price target from $50 to $35.

The "final straw," Seyrafi wrote in a research note Thursday, was the forecast provided late Wednesday by key rival Cisco Systems Inc. The maker of networking gear said orders fell precipitously in October, and the company projected a sales decline of 5 percent to 10 percent in the quarter ending in January. It said economic weakness, previously seen mostly in the U.S., was spreading to Europe and Asia.

HP has a large international business, Seyrafi noted, and is vulnerable to the same headwinds that Cisco is.

Furthermore, Dell Inc. is being aggressive on prices, and the dollar has risen from last year, cutting profits made overseas, Seyrafi wrote.

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