HP Earnings: Will Aruba Acquisition Help?

In a report published Wednesday, Wells Fargo analysts maintained an Outperform rating on

, with a valuation range of $43-$47. The analysts expect the company to report in-line results, EPS at $0.86 and upside potential to the Wells Fargo revenue estimate of $25.2B. "We believe currency is unlikely to have an incremental impact beyond guidance (6pts to FY revenues and $0.30 to EPS)," the report said. The analysts expect HP to reiterate its full-year guidance of $3.5-$4.0B. This guidance could be supported by the acquisition of Aruba, which closed on May 18. The analysts estimate the acquisition to be accretive by $0.04 for the rest of the current year. For F16, a $0.04 accretion from the acquisition is expected to offset the estimated $0.05 dilution from a potential sale of the company's H3C networking unit. In the report Wells Fargo noted, "We continue to expect several of its businesses to start bottoming and, separately, believe the upcoming corporate split should unlock shareholder value." The analysts expect the company's PCs and printers performance to be in line, while margins to continue improving in Services. HP's x86 server business is likely to have performed well on industry strength, which is expected to continue into the next quarter. "We expect mix to drive some margin improvement in F15," the report added.