Through TheFLY's Eyes: Hewlett-Packard Company
from Theflyonthewall.com













From Much-Maligned To Much-Improved

Hewlett-Packard (HPQ), which had been out-of-favor in Wall Street circles for so long that some traders and investors thought the company’s full name was “much-maligned Hewlett Packard,” looks like its turnaround is underway.

Hewlett said it earned 51c per share in Q2, compared to 33c per share a year ago, and a 49c consensus estimate. In addition, Hewlett said Q2 revenue rose to $22.6B, compared to $21.6B a year ago, and a $22.6B consensus estimate.

Sector analysts were generally positive regarding the report. In particular, Goldman Sachs commented that Hewlett’s margin improvements are straddling all key sectors, providing solid evidence that Hewlett should be able to exceed its 7.5%-8% operating margin guidance for fiscal 2007. Further, Goldman also argued that Hewlett could be one of the best defensive stocks at this stage of the economic growth cycle, providing both a shelter in the midst of a battered tech sector and a firm opportunity for share appreciation.

And the market continued its generally favorable response to Hewlett on Wednesday: in early afternoon trading Wednesday, Hewlett surged almost 4% or $1.22 to $32.33 with more than 19M shares traded.

Moreover, and if the company continues to improve its business fundamentals in the quarters ahead, the modifier in front of Hewlett will no-doubt change from “much-maligned” to “much-improved.”