Signs that the turnaround plan at Hewlett-Packard is finally yielding positive results has prompted one brokerage firm to increase its rating on share of HP, while eight others raised price targets. This has set the stock up for a good bounce at the opening bell on Wednesday.
Expectations had been low for the fourth quarter at HP following a third quarter that was disappointing and after its rivals, Cisco Systems and IBM reported results that were poor.
However, HP surprised analysts on Tuesday by reporting revenue that was stronger than expected thanks to growth in their enterprise group, which is used to supply servers, networking and storage products for businesses.
Shares at HP were up nearly 6% at the bell on Wednesday. Sales at HP’s enterprise were up 2% compared to the same period one-year ago, but 12% compared to last quarter.
The company was able to maintain its earnings forecast for a full year, which one analyst said was very good after the big disappointment from Cisco.
The company has been distancing itself from the falling PC industry. It reported a drop in PC sales that was smaller than had been expected.
Some Wall Street analysts expressed a concern that a China slowdown might hurt the company. Cisco warned earlier of weakness throughout China, while IBM announced sales in China had fallen during the latest three-month period.
Analysts said however, that it appears that HP has managed emerging markets’ volatility much better than its rivals, noting that revenue in the region of Asia Pacific had increased during the quarter by 4%.
Growth in that region was aided by a contract for laptops in Uttar Pradesh a state in India, which was valued at more than $450 million. The value of that contract has not been disclosed by HP.
Another brokerage house increased its rating for stock at HP from underweight to equal-weight citing a balance sheet that is improving and a moderation in the falling off in its printer and PC businesses. The price target by that brokerage was increased from $20 to $25.
HP shares were at a high of 12 months at $27.77 August 2, while they hit their 12-month low last year in November at $12.22.
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