Hewlett-Packard Earnings Preview: What The Analysts Are Saying

Hewlett-Packard HPQ is set to report its fourth quarter 2012 results on November 26 after the market close. Analysts are expecting the company to report revenue of $27.9 billion and EPS of $1.00. Deutsche Bank: Expect ongoing revenue and profitability headwinds to remain Chris Witmore, analyst at Deutsche Bank DB believes that the company will report in-line revenue and EPS as the company's PC results should benefit from recent gains in market share. Witmore believes that the company's main product segments (printing, servers, storage, software, networking) remain weak. “Overall, we continue to believe all HP's major businesses face structural decline and margin pressure and we see few drivers for acceleration/top line recovery in 4Q13-14 timeframe,” according to Witmore in a research report published on November 25. Shares of the company are Sell rated with a $16 price target Goldman Sachs: Solid quarter but risky outlook Bill Shope, analyst at Goldman Sachs GS believes that the company is “suffering from years of underinvestment and is facing secular earnings power erosion.” Shope feels that the company is erroneously categorized as a “turnaround story” by bulls as shares can “face incremental selling pressure,” according to a research report published on November 19. Shope also believes that the company has gained market share in the PC industry. As a result the company should report earnings that are in-line with estimates, but the company's next quarter guidance could come in below the Street's. Shares are Sell rated with a $17 price target. JPMorgan: Free cash flow could provide upside Mark Moskowitz, analyst at J.P. Morgan JPM believes that the company has a bright outlook over the next 12 to 15 months based on the company's future cash flow. “With HP, our C2013/2014 estimates for free cash flow as a percentage of revenue are trending below C2012 levels, but this dynamic is operative other companies given the tougher IT spending backdrop,” Moskowitz wrote in a research report dated November 18. “Overall, we expect HP to asustain decent free cash flow trends, which should keep investors interested,” Moskowitz added. If the PC and printing segments start to improve, these represents “sturdier cash cows” for the company. For the quarter, the analyst is expecting revenue of $27.736 billion and $1.00 EPS, roughly in-line with the Street's estimates. Free cash flow could come in better than expected which could help shares. Shares are Neutral rated with a $29.00 price target. Investors of Hewlett-Packard has had a difficult time staying positive. Shares are virtually unchanged from two years ago compared to an almost 50 percent rise in the S&P 500. Shares hit all time lows in late 2012 but have since doubled in value.