Hewlett-Packard (NYSE: HPQ) Stock Price Targets Up Ahead of Earnings

Hewlett Packard Inc. (NYSE: HPQ ) stock is up more than 27% over the past year. The Q1 Hewlett-Packard earnings , due after the closing bell tomorrow (Tuesday), are unlikely to trigger a major share-price move - but they will tell us more about a big change coming soon...

You see, Hewlett Packard is set to split in two before the end of 2015.

Announced in early October , the Palo Alto, Calif.-based company will spin off its legacy printer and PC business into a company called HP Inc. The corporate hardware, cloud, and software businesses, meanwhile, will become known as Hewlett-Packard Enterprise.

HPQ stock investors will want to pick out those segments in the Q1 earnings report for clues about the health of the separated companies. And CEO Meg Whitman is likely to give an update on the progress of the split itself.

After five years of restructuring, the picture is slowly starting to brighten for HP. But investors probably won't see the fruit of those changes until we get closer to the split later this year.

Here's what investors need to know about the Q1 Hewlett-Packard earnings report:

What to Watch for in the Q1 Hewlett-Packard Earnings ( HPQ )

The numbers : The consensus for earnings per share ( EPS ) is $0.91. That would be a year-over-year increase of 1.11%. The outlook for revenue is $27.35 billion, which would be a 3% decrease from the same period a year ago. HPQ's first quarter ended Jan. 31.

The last quarter : Hewlett-Packard earnings for Q4 were flat. EPS came in at $1.06, exactly as forecast and 5% higher than the same quarter a year earlier. Revenue of $28.4 billion just missed expectations and was down 2%.

The stock : HPQ stock is up 1.45% over the past three months. Hewlett-Packard stock closed at $38.19 today (Monday). HP pays a quarterly dividend of $0.64 a share for a yield of 1.68%.

The analysts : Over the past three months, six analysts have increased their price target for HPQ stock. The consensus one-year target is $41.96, a little more than 10% higher than where Hewlett-Packard stock trades now.

The background : Hewlett-Packard is in the final stages of a five-year turnaround plan that will conclude with its split into two companies. The break-up should be a positive for both HPQ shareholders as well as the separated companies. But until it happens, Hewlett-Packard will remain in a holding pattern.

Now, here's a breakdown of what to expect in the Q1 Hewlett-Packard earnings...

Keys to the Quarter for Hewlett-Packard ( HPQ ) Stock

The bounce in HP's PC business should be just about over. The spike was a result of Microsoft Corp. (Nasdaq: MSFT ) ending support for Windows XP. That drove many consumers and businesses alike to upgrade their PCs. In the last quarter, the PC segment was the only one that grew revenue.

Revenue from the printing business, which along with the PC segment will make up the new HP Inc., slipped 4%. Here Hewlett-Packard has started to focus more on better-margin, high-end products. The Hewlett-Packard Q1 earnings will tell us whether that strategy is working.

All the businesses that will make up Hewlett-Packard Enterprise were down last quarter.

Of most concern this quarter is the services and software division. It includes the fast-growing cloud and Big Data markets. This is where Hewlett-Packard Enterprise will need to draw much of its future growth. The company is smartly investing $1 billion over two years in its Helion cloud technology.

The company should see some benefit from a rebound in the global market for servers and storage.

On balance, the Q1 HPQ earnings won't be terribly dramatic one way or the other. But the company has positioned itself to benefit from several strong trends in tech.

The Bottom Line : The Q1 Hewlett-Packard earnings will give us a status report on a company in transition. Tuesday's numbers will give us some idea of the health of H-P's various segments ahead of its split into two companies later this year. Keep Hewlett Packard ( HPQ ) stock on your radar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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