Hewlett-Packard Co (HP) squeezed out a gain amid Friday’s market plunge after issuing an earnings report that kept negative surprises to a minimum.
“For the first time in several quarters, HP did not mention unexpected bad news,” Citigroup Inc analyst Jim Suva wrote in a note to investors advising they buy the stock. “Previous quarters HP reduced cash flows, stated higher separation costs, more unplanned restructuring & costs, etc. We now believe the bad news is over.”
Hewlett-Packard’s shares rose less than 1 percent to close at US$27.47 after advancing as much as 7.6 percent earlier in the day. The stock gave up most of the increase as the Standard & Poor’s 500 Index tumbled 3.2 percent, marking the gauge’s worst day in almost four years.
Photo: Reuters
With plans to split into two businesses in November — one offering technology and services to businesses, and another selling PCs, printers and other gadgets to consumers — chief executive officer Meg Whitman is seeking to make them more responsive to market changes.
She has had to ask investors to endure the changes inherent in a split between two companies.
Jefferies LLC analyst James Kisner said that Hewlett-Packard maintained its forecast for free cash flow (FCF).
“We continue to believe the shares will grind higher as uncertainty around the FCF outlook is alleviated,” he wrote.
Sanford C. Bernstein & Co retained its outperform rating on the shares and a price target of US$45.
“HP’s Q3 results were generally in line with consensus, and likely better than many investors (including us) had feared,” Bernstein analyst Toni Sacconaghi wrote in a note to investors.
Hewlett-Packard sales declined across most divisions in the fiscal third quarter. PC shipments fell 9.5 percent in the second quarter, and companies are spending less on software and services.
“You’ve got this underlying current of a negative macro within an IT spending environment on PCs and printers,” said Monness Crespi Hardt & Co analyst Jeffrey Fidacaro, who has a buy rating on the stock. “They had a decent quarter given those challenges.”
Hewlett-Packard is due to meet with analysts next month, when it is expected to give more financial details on the post- split companies.
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