HP Closes HyperX Buyout; Shares Gain 2%


HP Inc. (HPQ) completed the acquisition of HyperX, the gaming unit of Kingston Technology Company. Following the aforementioned closure news, the share price of the technology company rose 2.2% to close at $29.86 on Tuesday.

The cash deal, which was announced in February this year, was valued at approximately $425 million.

The acquisition is expected to boost HP’s growth in peripherals and expand its gaming network. Furthermore, the deal is likely to be accretive to HP’s adjusted earnings within in the first year.

HP’s Personal Systems President Alex Cho said, “We are delighted to officially welcome the incredible people of HyperX to HP. HyperX has built a loyal following among gamers and we look forward to further strengthening the HyperX brand.”

Cho further added, “This acquisition further advances our ability to create the compute experiences of the future, expand into valuable adjacencies, and unlock new sources of growth.”​ (See HP stock analysis on TipRanks)

On May 28, Evercore ISI analyst Amit Daryanani reiterated the stock’s price target of $38 (27.3% upside potential) and a Buy rating as he thinks “the steady state EPS will be much higher for HP going forward versus what investors are apprehensive about, due to buybacks and better profitability on print.”

Daryanani said, “While clearly some of the benefits here are cyclical in nature, we think there is a fair amount of secular change that should make the current margin structure in print more sustainable and FCF should provide a sustained lever for upside.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 3 Buys versus 2 Holds. The average analyst price target of $35.40 implies 18.6% upside potential to current levels. Shares have increased 30.9% over the past six months.

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