HP Is An 'An Under-Appreciated Turnaround Story,' Says Sterne Agee

Meg Whitman

Photo: Joe Seer / Shutterstock.com

Even though HP is expected to report a decline in year-over-year revenue tomorrow, one analyst is gung-ho about the stock’s future.”We believe the company is an under appreciated turnaround story where its trading multiple could expand as investors get more comfortable with the company’s improved focus and execution,” Shaw Wu, an analyst at Sterne Agee said a research note issued today.

Analysts are expecting $30.8 billion in revenue and $0.86 in earnings per share (EPS). HP has offered guidance of $0.83-$0.86 in EPS.

As nice as that sounds, Wu also points out that HP has set low expectations.

“The reason why we think HPQ will meet or exceed consensus is because we believe the company has set the bar low enough where consensus is looking for a modest 5% Y/Y decline in revenue,” he wrote.

The company is gaining credibility with enterprise and small business customers, he says, which will offset the losses expected in the consumer market.

When it reports in April, Wu expects the company to offer guidance of April $0.95. HP is no longer offering revenue guidance, only EPS.

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