On Mar 20, 2013, Zacks Investment Research upgraded
) or H-P to a Zacks Rank #1 (Strong Buy).
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With a stellar return of 63.6% over the past three months,
continuous deal wins and a positive estimate revision trend, this
provider of computing solutions is an attractive investment
Why the Upgrade?
Positive news flow continued for H-P over the past few months,
prompting the upgrade.
In January, H-P managed to retain a federal contract worth $543.0
) protest. Earlier, a 5-year wireless tracking contract was
announced by the Department of Veterans Affairs. H-P won the
contract defeating 90 other competing companies. IBM challenged
the agency's decision and its evaluation process before the U.S.
Government Accountability Office, the agency to resolve contract
disputes. The contract was held back for evaluation but was
ultimately awarded to H-P.
Since January, H-P sealed a number of deals. A Poland-based
government healthcare unit, National Centre for Health
Information Systems opted for H-P's services to develop the
e-health environment (or electronic health record system) across
Poland. The Department of Vermont Health Access renewed a service
deal with H-P's Enterprise Services unit for 4 years. The tech
giant also provided its services to automatic test equipment
manufacturer Teradyne Inc., bellwether brewer Molson Coors
Brewing Co., the U.S Immigration Agency and the U.S. Army Human
Resources Command among others.
H-P also unveiled a new BPO (business process outsourcing)
solution, a host of desktop printers, two media players and a
customized mobile application for the U.S. Department of Housing
and Urban Development. The new launches indicate the PC giant's
focus shift from its low-margin PC-centric business.
H-P recorded a 5.5% year-over-year decline in revenues and 11.8%
decline in earnings per share in the first quarter of fiscal
2013. But the highlights of the quarter were a modest guidance,
share buyback and dividend payout. H-P was positive about the
growth within its Storage and Networking segments. Also, the
company mentioned that it would continue to focus on the
strategic enterprise services business, which includes cloud,
application modernization, security and information management,
Lastly, H-P's restructuring activities, which focus on reducing
the cost structure and realigning the workforce to create
investment capacity, support growth initiatives and innovation,
which enable more effective operations globally, are also
In the last 60 days, 14 estimates were revised upward for fiscal
2013 and fiscal 2014 each. The Zacks Consensus Estimate for 2013
increased 5.2% to $3.47, while the same for 2014 jumped 3.4% to
In the past four quarters, the company has posted an average
surprise of 6.5%. Considering the above factors, H-P has the
potential to post a positive earnings surprise in the upcoming
Other Stocks to Consider:
Investors could also consider other technology stocks that are
doing well right now. These include
NetSol Technologies Inc.
) both carrying a Zacks Rank #1 (Strong Buy).