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History says to buy HP ahead of earnings

Hewlett-Packard is set to report earnings after the bell on Tuesday, its first quarterly report since announcing that it will split into two companies.

And according to Robert Cihra, who covers the stock for Evercore ISI, Hewlett-Packard may lose something because of its split.

"I actually would worry that HP loses some of the advantages they get from scale," Cihra said Tuesday on CNBC. "One of the biggest things HP brings to the table right now is that they're just enormous. That helps them on sales end and on the margins end. So I do think they risk a little of that."

Cihra rates the stock "equal-weight" and has a price target of $38 per share, which is in line with where the stock is currently trading.

Nonetheless, the charts may indicate a buying opportunity, according to Katie Stockton, chief technical strategist at BTIG.

"The chart really looks very good ahead of earnings," shesaid. "If you look at the last eight earnings reports, the average move the next day was about 5 percent. And if you look a month later, the average move was about 10 percent higher. If you compare the current environment to ahead of the November 2013 report, the stock is set up very similarly on its chart."

Much as it did before its November 2013 earnings release, Hewlett-Packard recently tested its 200-day moving average before breaking out to the upside. Likewise, Stockton's chart shows that the stock faced resistance before its quarterly report a year ago. However, it broke above it and is now up 38 percent over the last 12 months.

Stockton expects Hewlett-Packard will once again overcome resistance. "The chart does support a breakout," she said.

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