Hewlett-Packard shares decline after EDS deal

HP is buying EDS for $13.2 billion, or $25 per share, in a deal that will create the world's second largest technology services provider behind IBM.

Citi Investment Research analyst Richard Gardner said in a client note he would buy HP's shares on the pullback, noting the company "has lost more market cap over the past 24 hours than the total purchase price of EDS, a clear overreaction."

"While HP does face slowing industry growth, more stable component pricing and a more stable dollar going forward, we believe these factors are more than fairly reflected in consensus estimates and the share price," the analyst wrote, keeping a "Buy" rating on the stock.

Banc of America analyst Scott D. Craig also called the decline a buying opportunity and an overreaction on the part of investors.

"While there are clearly some questions to be answered strategically (i.e. why not software, consulting, India, etc.?), we believe the acquisition makes strategic long-term sense, even if the price paid is a little aggressive," he wrote.

Shares of Palo Alto, Calif.-based HP fell $2.08, or 4.4 percent, to $44.76 in afternoon trading, after earlier dropping as low as $43.36. In the past 52 weeks, the stock has traded between $39.99 and $53.48.

Shares of Plano, Texas-based EDS climbed 28 cents to $24.36.