Hewlett-Packard Analyst Roundup After Q4 Results

Hewlett-Packard Company HPQ reported Q4 results largely inline with estimates Tuesday.  The stock spiked in early trading Wednesday and traded at $38.77, up 3.03 percent.

Below are highlights from analyst comments on the stock after the earnings report along with current ratings and price targets.

Credit Suisse - Outperform, $45 price target

“In F4Q14, HP's business posted results essentially in line with estimates and while revenues were light at $28.4bn, GM and OM exceeded our estimates and EPS was in line at $1.06. We adjust our FY15E EPS to $3.98 from $3.83 and introduce FY16E EPS of $4.20.  HP has a FY15 non-GAAP diluted EPS outlook of $3.83-$4.03. Management communicated a declining PC market, a decline in Enterprise Services revenue and growth in server, storage and networking. We continue to believe that the significant level of $1.8bn in restructuring (2 percent of sales and 20 percent of PT income), driven mainly by an incremental headcount reduction of 10,000 could mean there is potential upside in profitability.”

Citi - Buy, $40 price target

“HP reported October quarterly results with sales slightly below expectations (largely expected given FX) of $28.4B vs. consensus $28.8B, while EPS was in line at $1.06. The 1FQ EPS outlook of $0.89-$0.93 ($0.91 mid-point) was slightly below consensus of $0.93 causing the stock to decline -1% after hours. Management reiterated its FY15 financial goals and tax-free spin-off plans, both of which were expected as these were communicated just last month. We note that our sales and EPS estimates are above consensus, while our sum-of-the-parts valuation indicates $52-$68 fair value.”

Jefferies - Hold, $38 price target

“The company promised more detail on separation costs (and cost savings opportunities) on the next earnings call; more specific FY16 financial targets for each of the new component companies (HP, Inc. and Hewlett-Packard Enterprise) will come "closer to the end" of FY15. We generally support the split and see some potentially un-captured value for HPQ shares on a sum-of-the-parts basis (our SOTP model currently spits out ~$42). That said, we don't see a near-term catalyst to unlock this value. We also don't find the current valuation particularly compelling on an earnings basis, particularly in light of HP's relatively unattractive end market exposures. As such, we're inclined to wait for another entry point.”

Deutsche Bank - Buy, $45 price target

“Positives: Non-GAAP EPS was at the high end of prior guidance of $1.03- $1.07. HPQ improved OpMgns in all segments Y/Y, driving a 60bps Y/Y improvement in OpMgns. Personal Systems grew 4 percent Y/Y and units were up 5 percent Y/Y, despite the PC market being flat Y/Y. Cash flow generation including divestitures was a strong $9.3B in FY-14. In addition, HPQ saw no disruption to business trends in F4Q, despite the announcement of the break-up, a credit to mgmt’s ability to articulate and communicate its strategic vision to customers. Negatives: Revenue declined Y/Y and mgmt is expecting a flat year in FY-15. Enterprise Group (servers and storage) declined 4% Y/Y and missed our expectations with all sub-segments down Y/Y except Networking.”

Cantor Fitzgerald - Hold, $29 price target

“HP reported 4Q:FY14 results (ended October) with sales missing our estimate but pro forma EPS meeting our projection and the Street, while the company's 1Q:FY15 pro forma EPS outlook straddles our projection. In our view, the tone of the call was neither upbeat, nor negative, but lukewarm. As such, we would describe this as a "zhou-like" (i.e., zhou is a traditional Chinese dish of soft white rice in lukewarm water with a rather bland taste) quarter, missing the spark of a strong performance but lacking the drama of a really bad print. That said, the big news out of HP was delivered in October with the announcement to separate into two companies.”

Morgan Stanley - Overweight, $40 price target

"Margins increased Y/Y in all businesses as cost cuts flowed through more so than in past quarters. Management expressed confidence in both improved revenue performance and continued margin expansion in FY15. We continue to like the risk:reward at just 8x FY14 reported FCF."