Investors Shouldn't Hide From HP's Turnaround

PALO ALTO, Calif. (TheStreet) -- This time last year investors were scratching their heads about HP(HPQ) , wondering what to make of new CEO Leo Apotheker and his controversial plans to revitalize the company.

Fast forward a year and everything has changed in Palo Alto. HP ditched the unpopular Apotheker in September, replacing him with Meg Whitman. With the PC giant's stock plunging almost 40% over the last year, though, Whitman has spent the last few months trying to convince investors that she can get HP back on track.

HP CEO Meg Whitman

Investors, however, shouldn't hide from HP, which reports its fiscal first-quarter results after market close on Wednesday, even after recent mixed results from PC rival Dell(DELL) . Under Whitman, HP is at least heading in the right direction, say analysts.

"We believe HPQ is an underappreciated turnaround story," explained Shaw Wu, an analyst at Sterne Agee, in a recent note. "What we are picking up are mixed trends where the company is regaining credibility with customers and fixing inventory issues in its PC (31% of revenue) and printer (20%) businesses."

Wu also said that relative strength in enterprise and Small to Medium-Sized Business, which accounts for between 65% and 70% of the company's overall revenue, should offset weakness in consumer sales. HP's consumer business makes up around a quarter of the company's overall sales, according to Sterne Agee.

Wu rates HP a buy with a price target of $34.

HP shares were down 39 cents, or 1.33%, $28.96 on Wednesday.