In a research report issued this morning, BMO Capital analyst Keith Bachman reiterated a Market Perform rating on shares of Hewlett-Packard Company (NYSE:HPQ), and reduced the price target to $33 (from $35), given the potential for ongoing weakness in both the printing and PC markets. Additionally, the company reported fiscal third-quarter results that came up short with consensus expectations.
Bachman wrote, “‘We think that the Hewlett Packard Enterprise (services, hardware and software) business was mostly positive on the top line, while PC/Printers continue to struggle and management’s outlook in those segments was mostly negative in the short term. EPS of $0.88 beat our/Street estimates of $0.86 and $0.85, respectively, but note that $0.02 was attributed to pulling through supplies business from Q4 to make sure channels had necessary inventory. While HP maintained FCF guidance for the year, HP narrowed its EPS range, implying lower Q4 results, and did not address CC revenue estimates (flat to slightly down), which we continue to think will be challenged.”
“We are lowering our revenue and EPS estimates, following our lowered estimates on August 16, though our changes to FY15 are not material. We are reducing our FY15 rev estimates, to $103.81 billion from $103.87 billion and FY15 EPS to $3.63 from $3.64. We are reducing our FY16 revenue estimate to $102.06 billion from $103.59 billion and FY16 EPS to $3.73 from $3.81. We project FY15 FCF of $3.63 billion (previously $3.67 billion), and we project FY16 FCF of $5.56 billion (previously $5.30 billion),” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Keith Bachman has a total average return of 20.4% and a 63.0% success rate. Bachman has a -3.9% average return when recommending HPQ, and is ranked #54 out of 3738 analysts.
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