The stock of price of Hewlett-Packard Company (NYSE:HPQ) increased by nearly 3 percent to $22.77 per share as of writing this article in anticipation for a possible return of more cash to investors.

Earlier today, the shares of the company jumped to as much as $22.90 per share, its highest intra-day price since May 15, according to report from Bloomberg.

Hewlett Packard HPQ

Morgan Stanley analyst, Katy Huberty upgraded its rating for the shares of Hewlett-Packard Company (NYSE:HPQ) from equal weight to overweight with a price target of $27 per share citing that the company’s CEO Meg Whitman is focusing on attaining free cash flow (FCF) targets that could be stronger than the cash profits projected by Wall Street analyst.

Last month, Whitman emphasized that the recovery plans of the company are succeeding after the company reported better-than expected results.

According to Huberty, it is possible that Hewlett-Packard Company (NYSE:HPQ) would deliver $6.7 billion FCF or $3.45 per share, higher that the company’s projected $5 billion FCF this year.

Huberty also said that the excess FCF would come from a lower deposit in a legal proceeding in India ($34 million versus $400 million), HP’s cash conversion cycle, and moving back its capital spending. The analyst estimated that Hewlett-Packard Company (NYSE:HPQ) would recoup $0.13 to $0.15 from cash conversion.

In the research note, Huberty wrote, “Even our significantly higher than consensus FCF forecast assumes a cash conversion cycle forecast of 23 days exiting FY13 and FY14, which represents limited improvement from the January quarter and HP’s history. Every one day improvement in CCC adds $0.13-0.15 of annual FCF per share and a return to historical level of 20 days (e.g. 2008) would add another $800 million, or about $0.40 per share, to FCF in FY14.”

In terms of capital expenses, Huberty noted that Hewlett-Packard Company (NYSE:HPQ) rate of spending during the first quarter is lower than its projected $3.5 billion spending. The analysts cited that the company’s capital expenses could be as low as $2 billion for the fiscal year.

Furthermore, Huberty believed that the company is capable of boosting is profitability per employee due to its plan to cut 29,000 jobs.

“Consistent with HP’s higher OpEx metrics, the company’s EBIT per employee of $33,000 is below its peer average of $45,000. Assuming no revenue impact, the planned headcount cuts (29,000 employees) alone add $3,000 per employee, bringing HP in-line with Dell. More stable revenue streams and mix driven margin improvements could help return HP to its historical levels of $40,000 longer term. We model 40 bps of operating margin improvement in FY14 and 50 bps in FY15, which only returns HP to its FY12 operating margin of 9.3%,” the analyst said.

Dan Niles, analyst at AlphaOne Capital is also bullish on the shares of Hewlett-Packard Company (NYSE:HPQ) citing the PC market share gains of the company and the depreciation of the Japanese yen. The company’s PC shipments during the fourth quarter increased from 15.5 percent to 16.2 percent. The company regained its crown from Lenovo (HK:0992).

Niles believed that HPQ is cheap at 6.6 times forward EPS, but he warns that the PC business is still in a long-term decline.