Rakers has a “buy” rating on HP shares and has a $62 price target. He expects positive results from tonight’s earnings report.
“We’re still consumer-driven in terms of the demand environment,” he said of the firm.
“As we move into the second half of the year, we start to see a change and a shift toward the commercial or the corporate PC upgrade cycle...That gradually shows up in the second half, rather than a material upside driver over the next couple of quarters.”
Additionally, Rakers also has a “buy” rating on HP's rival Dell , expected to report earnings on Thursday.
“That company is levered to the corporate PC upgrade cycle," he explained. "It’s still a little bit early on the Dell story, but from a valuation standpoint, it’s beginning to become more attractive as we look toward that PC upgrade cycle.”
The sentiment is generally positive for tech earnings, said Rakers. He added that most of the companies are “very structurally sound” and expects to see a continuation of improving IT spending throughout the year.
IPad a Threat?
In the meantime, Rakers said Apple’s new iPad should not threaten the PC market.
“I’m not a believer that the recently announced Apple iPad is going to meaningfully cannibalize the PC market, either be it at the consumer level nor the corporate level either over the next year or so,” he said.
- Watch Rakers' Previous Appearance on CNBC (Nov. 24, 2009)
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Rakers does not own shares of HPQ or DELL.
HPQ is a Stifel Nicolaus Select List compelling idea.
Stifel Nicolaus makes a market in the securities of Dell and has received compensation for non-investment banking, securities-related services from Dell in the pat 12 months.