What to Expect From HP Earnings

HP Inc. (NYSE: HPQ) is scheduled to release its fiscal third-quarter financial results after the markets close on Wednesday. The consensus estimates from Thomson Reuters call for $0.44 in earnings per share (EPS) on $11.47 billion in revenue. In the same period of last year, HP posted EPS of $0.88 and $25.35 billion in revenue.

As personal computer sales have been sliding over the summer, maybe it is time to stop selling them and, instead, devise a program that includes PC hardware as part of an overall IT bundle of devices, software and other services. HP recently announced such a program, which it calls “Device-as-a-Service” (DaaS).

In some ways it sounds more like a program from a wireless phone carrier than a traditional hardware company like HP. For a monthly per-user fee, customers receive the latest technology and customized services and support from HP, including PC configuration and installation, data migration, onsite support and technology recycling. Except for the customer support, it sounds pretty much like the now-dead wireless phone subscription plans.

In the previous quarter, HP delivered strong results and solid progress toward its long-term strategy. Management also said that it achieved operational objectives, unleashed truly amazing innovations and grew in strategic areas of its business, despite tough market conditions.

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A few analysts weighed in on HP ahead of the earnings report:

• RBC Capital Markets reiterated a Sector Perform rating with a $14 price target.
• Credit Suisse reiterated a Buy rating with a $19 price target.
• Deutsche Bank reiterated a Buy rating.
• Barclays reiterated a Hold rating.
• Brean Capital reiterated a Buy rating.
• Mizuho reiterated a Neutral rating with a $12 price target.
• Sanford Bernstein reiterated an Outperform rating with a $15 price target.
• Sterne Agee CRT reiterated a Neutral rating with a $12 price target.
• Jefferies reiterated a Buy rating.
• Citigroup reiterated a Neutral rating with a $13 price target.
• Wells Fargo reiterated a Market Perform rating.

So far in 2016, HP has outperformed the broad markets, with the stock up 25%. Over the past 52 weeks, the number is more or less the same.

Shares of HP closed Tuesday up 1.4% at $14.57, with a consensus analyst price target of $15.32 and a 52-week trading range of $8.91 to $14.82. The stock was up 0.5% at $14.64 in early trading indications on Wednesday.

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