What should you expect?
Dinesh Moorjani, an analyst with Broadpoint AmTech, says weak spending by large corporations on computer servers and storage, and softness in printing supplies — printer ink is a profit machine for HP — will drag down sales. But cost-cutting should cushion the blow to earnings
Analysts expect a profit of 86 cents per share and sales of $27.4 billion, according to a poll by Thomson Reuters. For the full fiscal year ending in October, analysts expect $3.71 per share in profit and $113.4 billion in sales.
But if you're looking for an entry point in this stock, there may be no time like the present.
“Now is a good time to buy Hewlett-Packard. The stock is inexpensively valued, adds Sanford Bernstein analyst Toni Sacconaghi. "It does well if the market retrenches and it does well if tech spending improves." And he adds, "some of the recent underperformance is unwarranted."
It’s also worth noting one of HP's biggest priorities right now is integrating Electronic Data Systems, a technology services company it bought for $13.9 billion last year. HP is cutting 24,600 jobs, or nearly 8 percent of HP and EDS' combined work forces. Analysts say the integration appears to be ahead of schedule.
EDS is important for HP because it increases HP's challenge against IBM in technology services. That area that has held up well despite the recession because farming out tech chores can save money for the companies.
What’s the trade?
I think the stock is interesting as a valuation play, muses Guy Adami.
H-P is up 3% for the year and IBM is up 20%, adds Tim Seymour. If you think they’re in the same business you do the math.
I think the stock is very inexpensive at current levels, counsels Sacconaghi.
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Trader disclosure: On May 18th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (BX), (EEM), (FCX), (INFY), (PBR), (TTM); Macke Owns (AAPL), (WFC), (AGU), (GE), (SKF), (SDS); Finerman's Firm Owns (PBR), (RIG); Finerman's Firm Owns (BAC) Preferred; (WFC) Preferred; Finerman's Firm Is Short (BAC), (WFC); Najarian Owns (AMD) Calls; Najarian Owns (APC) CAll Spread; Najarian Owns (BBY) Put Spread; Najarian Owns (BP) Call Spread; Najarian Owns (BX) Calls; Najarian Owns (FAS) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (HPQ) Put Spread; Najarian Owns (MOS) Call Spread; Najarian OWns (XHB) Call Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (XLU) Calls
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