) will report its third-quarter earnings on Wednesday, May 22.
Analysts have recently become more optimistic about the company's
potential earnings, raising their expectations by $.04 per share
and increasing their estimates for FY13 by approximately four times
that number. HP has been up 50% in 2013 and an impressive 80% over
the last six months. This makes HPQ the best performing stock among
its peers by far.
The bulls have taken over HPQ's market today; so far, roughly
15,000 calls have been traded, compared to 8,800 puts. The biggest
player today was a weeklyMay 23 .50 call, where roughly 8,100
contracts were traded. It seems like investors are expecting a
quick post-earnings jump, so that they are able to make profits on
Because of the poor performance of the PC market, HP has looked to
move away from PCs and is currently seeking to offer a wider array
of products. HP can prove to be even more successful in the market
if it shows investors that this turnaround is moving faster than
expected. Although some analysts on Wall Street are skeptical about
HP's earnings, HP has historically exceeded estimates in past
HP's relatively new CEO Meg Whitman has been a key player in HP's
turnaround and has been just what HP needed in this fragile PC
"Whitman has come in like a breath of fresh air… morale is up,"
said Rob Enderle, principal analyst at the Enderle Group. Although
she started off laying low, Whitman says that she will now be
turning HP's focus toward innovation: "I increased R&D spending
and basically focused the R&D efforts and said we've got to get
these products that were close to market to market fast."
HPQ closedMonday at $12.18 and has a 52-week low of $11.35 and a
52-week high of $24.05.
Buy the June HP 21 calls for $1.12
$112 per 1 lot
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