Citi's 4 Things To Look For In Hewlett-Packard's Q1 Results

Citi commented on Hewlett-Packard Company (NYSE: HPQ) ahead of its earnings release on February 24. The firm maintained a Buy rating and $46 price target.

Analyst Jim Suva felt that the company’s fiscal Q1 would be in line with consensus at $27.4 billion in revenue with EPS of $0.91 to $0.92. The results would also be positively impacted by gains in PC sales which were expected to offset at least some of the pressure from currency movements, according to Suva’s analysis.

Looking towards Q2, Suva anticipated EPS of $0.99 on revenue of $27.4 billion, slightly above consensus. The analyst also expected the company to maintain EPS guidance for the full year at $3.83 to $4.03.

Suva listed four things to look for in the upcoming Q1 results:

• 1. Look for “a status update on the tax-free spin-off of the PC/printing business.”
• 2. An “update on any traction in new service deals” as the firm’s CIO survey revealed “a lack of progress in service wins.”
• 3. Keep an eye on “printing revenues and margin outlook given on-going demand/inventory issues and weakness in Yen/USD rates.”
• 4. “Any signs of softer PC demand following XP-expiration.”

The analyst did not make any changes on estimates for the company and continued to see upside potential in the stock. Suva saw the breakup of the PC and printing business by the fall as an “unlocking of value” and that “overly negative sentiment” has provided a compelling valuation for the stock.

Hewlett-Packard recently traded at $38.41, down 0.3 percent.