Hewlett-Packard Bucks Market’s Plunge After Earnings ReportJack Clark and Alex Barinka
Hewlett-Packard Co. 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,” Jim Suva, an analyst at Citigroup Inc., 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 $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.
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’s had to ask investors to endure the changes inherent in a split between two companies.
James Kisner, an analyst at Jefferies LLC, noted that Hewlett-Packard maintained its forecast for free cash flow.
“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 $45.
“HP’s Q3 results were generally in line with consensus, and likely better than many investors (including us) had feared,” Toni Sacconaghi, a Bernstein analyst, wrote in a note to investors.
“You’ve got this underlying current of a negative macro within an IT spending environment on PCs and printers,” said Jeffrey Fidacaro, an analyst at Monness Crespi Hardt & Co., 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’s expected to give more financial details on the post-split companies.