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.