HP: Street Ups Targets, Estimates Ahead of Earnings

| About: HP Inc. (HPQ)

With Hewlett-Packard (NYSE:HPQ) due to report earnings Tuesday for its fiscal third quarter ended July, several analysts Friday have ratcheted up their estimates and target prices. The company’s guidance was for revenue to be flat to down 2% sequentially, which suggests a range of $26.8 billion to $27.4 billion, with non-GAAP profits for the quarter of 88-90 cents a share. The Street consensus is toward the upper end of the range, at $27.2 billion and 90 cents.

Here’s a rundown on some of this morning’s Street commentary on the stock:

  • Bank of America/Merrill Lynch analyst Scott Craig Friday repeated his Buy rating on HP, while upping his target price to $52, from $45. Craig contends the company should hit the high end of its revenue guidance, “given some signs of stabilization in end-user demand, particularly in the U.S., and positive currency impact.” Europe, he says, remains weak, but Asia hardware build rates “have also been encouraging.” For Q3, he raises his revenue forecast to $27.2 billion from $26.9 billion, while his EPS estimate rises to 92 cents, from 91 cents. For the October 2009 fiscal year, he now sees profits of $3.82, from $3.76, above the Street at $3.75.
  • Bernstein Research analyst Toni Sacconaghi likewise repeated his Outperform rating on the stock, while increasing his price target to $54, from $47. “Despite our belief that tech spending has not materially improved on a global basis over the last three months, we expect HP to modestly beat consensus estimates for both revenues and EPS” in the quarter. He expects revenue of $27.34 billion and EPS of 91 cents. For FY 2009, he goes to $3.82 from $3.80; for 2010 he now sees $4.20, up from $4.15. He also says Q4 guidance could be “handily above consensus.”
  • UBS analyst Maynard Um, who as noted earlier Friday raises his PC unit forecasts for both this year and next year, also repeated his Buy rating on HP, upping his target to $52, from $42. He’s looking for Q3 revenue of $27.2 billion and EPS of 89 cents. Um writes that he remains cautious on Q4 guidance, but that “recent signs of stabilization, ongoing benefits from cost-cutting initiatives and management’s historical record of solid execution provide some comfort.” Um lifted his FY 2009 EPS estimate by a penny to $3.66. For FY 2010, he now sees $4.01, up from $3.97.

Despite all the good cheer, HPQ Friday is down 27 cents, or 0.6%, to $44.08.

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