HP accidentally released its results early, but this bank’s still impressed

 
Harriet Green
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HP CEO Meg Whitman (Source: Getty)

Something of a gaffe for IT firm Hewlett Packard (HP) yesterday. It accidentally released its earnings early with a press release, while the stock market was still open.

Speaking to analysts on a conference call yesterday, chief executive Meg Whitman apologising for the slip-up:

Before we go to questions, I'm sure you all noticed that earlier today, the HP press release with earnings went live before the appropriate time and we are sorry about that, and we'll make sure that that doesn't happen again.

The earnings release was a mixed bag for the company. While it hit its expected target for earnings per share - 88 cents (52p) - it missed on revenues, which fell one per cent year-on-year to $27.3bn. That’s $110m below analysts’ consensus.

And more, it’s upping the number of people it’s making redundant, too, slashing jobs by another 11,000 to 16,000. That takes its total jobs cuts to 50,000 over a two-year period.

But not all are bearish on the outlook for HP.

As far as Saxo Bank's concerned, HP has been “the most impressive turnaround story in the technology sector the last 18 months”, says analyst Peter Garnry. Shares have soared 165 per cent, with Whitman sticking to a stringent cost-cutting programme.

Despite some major hurdles still in place for HP to jump over, Saxo says it’s one of its favourite calls in the industry, with its quantitative model forecasting a 17 per cent return over 12-months.

Our model is substantially more positive than the consensus. HP is currently trading at 8.7 times 12-month expected earnings per share, which makes the company one of the cheapest S&P 500 stocks on forward earnings.

Garnry adds, though, that the bank’s bullish stance is based “on a stabilised business and tight cost controls with a very low valuation”. This means that, despite the optimism, it’s still a case of low good value and a turnaround case which has, to date, been successful.