[from Barron's]HP: Buy Ahead Of Earnings Tonight, Caris Says
Posted by Eric Savitz
Hewlett-Packard (HPQ) tonight reported earnings for its fiscal fourth quarter ended October. The Street is looking for $27.39 billion in revenue for the quarter, and EPS of 82 cents.
Caris & Co.’s Shebly Seyrafi this morning advised investors to buy the stock heading into the report. He says the company will beat revenue expectations due to currency factors and strength in PCs and storage. He says margins should be helped by growth in supplies. Seyrafi notes that HP has lower U.S. exposure than many other technology companies.
Seyrafi sees revenue for the quarter of $28.2 billion and EPS of 87 cents.
Seyrafi expects the Imaging and Printing Group to grow 6.6% year-over-year, as the company continues to take market share from Lexmark (LXK) in both commercial and consumer printers. He expects operating margin for IPO to rebound to 15.3% from 13.5% in the fiscal third quarter.
In PCs, Seyrafi expects 27% year-over-year growth for HP, noting that the company has been taking market share in recent quarters. I would note that there have been strong third quarter earnings reports from many companies in the PC food chain, including Intel (INTC), Microsoft (MSFT), Nvidia (NVDA), Seagate (STX) and Western Digital (WDC). Seyrafi cites Vista uptake, falling notebook prices, growing adoption of notebooks in the education market and spreading mobile broadband as drivers.
Seyrafi sees the company’s Technology Solutions Group growing 10.5% year-over-year, driven by strength in both the blade server and enterprise storage segments.
One final note: the Street will surely badger the company on the post-announcement conference call for any hints of weakness in the U.S. corporate sector.
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