Hewlett-Packard appears on track to beat free cash-flow guidance in 2013, Morgan Stanley Managing Director Katy Huberty said Monday on CNBC.
On CNBC's "Fast Money," Huberty said that the company under CEO Meg Whitman "is in the process of healing the cost structure, healing the brand, healing employee morale, and that's driving better execution.
"And ultimately, the company will top their free cash-flow guidance by 35 percent this year. That's going to improve earnings quality, accelerate the cash return to shareholders and ultimately drive the multiple higher."
Huberty, who upgraded Hewlett-Packard stock to "overweight," noted that the company had reported $2.1 billion in free cash flow for the first fiscal quarter.
"That's one quarter of very strong free cash flow performance," she said. "They guided to $5 billion. We're assuming that they'll do $6.7 billion."
Huberty also sounded positive on Whitman's apparent focus shift for the company.
"We think Meg is focusing the management team on free cash flow metrics vs. prior CEOs focusing the leadership team on revenue metrics," she said.
In response to a question about how H-P could boost its revenue for the remainder of the year, Huberty said that revenue should not be the goal.
"The frank answer is, I don't think they need to grow revenue in the next 9 months," she said. "The call right now is about earnings and free cash flow recovery."
Huberty also touted several things the company was doing correctly.
"They're moving away from the Wintel ecosystem in computing. They've launched new multifunction printers that are taking share in the printer space. They're launching new, more power-efficient servers that sell into internet data centers and cloud data centers," she said. "So they're making the right investments, but I wouldn't expect to see revenue growth in the next nine months."
Trader disclosure: On March 18, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Mike Murphy is long BAC; Mike Murphy is long C; Joe Terranova is long VRTS; Joe Terranova is long SJM; Joe Terranova is long MJN; Joe Terranova is long SCCO; Joe Terranova is long AAPL; Joe Terranova is long GS; Joe Terranova is long PANW; Joe Terranova is long VSI; Joe Terranova is long AXP; Joe Terranova is long GPS; Joe Terranova is long KORS; Joe Terranova is long SWN; Steve Weiss is long BAC; Steve Weiss is long C; Stephanie Link is long AAPL; Stephanie Link is long GS; Stephanie Link is long CSCO; Stephanie Link is long SBUX; Stephanie Link is long FB;
For Katy Huberty
Morgan Stanley & Co. International PLC and its affiliates have a significant financial interest in the debt securities of HPQ; As of February 28, 2013, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research AAPL.