Reasons To Be Bullish On HP

Analysts at Loop Capital Markets initiated coverage of HP Inc. (NYSE: HPQ) ahead of the company's earnings report, scheduled to be released after Wednesday's close. Analyst Ananda Baruah initiated coverage of HP's stock with a Buy rating and $23 price target.

HP's printing business, which represents 40 percent of total revenue and 80 percent of total operating profit, is "tracking ahead of its supplies targets" and should see quarter-over-quarter growth in supplies for the foreseeable future, Baruah said. The PC business accounts for the remainder of the business could also benefit from a Windows 10 commercial PC refresh.

HP could also deliver a "materially stronger" revenue profile over time, which would mark an improvement versus the company's own guidance of "flattish +" profile, the analyst added. As such, the stock will ultimately re-rate higher from its current 10x multiple to a range of 12x-14x. The analyst's $23 price target is based on a 13x multiple on his 2019 earnings per share estimate of $1.80.

Here is a quick look at some of the other sell-side rating heading into the earnings print.

• Stifel Nicolaus: Hold rating, $14 price target.
• RBC Capital Markets: Buy rating, $22 price target.
• Jefferies: Hold rating, $18.75 price target.
• Susquehanna: Hold rating, $20 price target.
• BMO Capital Markets: Hold rating, $20 price target.
• Mizuho Securities: Buy rating, $21 price target.

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