Hewlett-Packard Company (NYSE:HPQ) will release its next earnings report on Wednesday, and analysts at Stifel are expecting to see positive operating expenditures and continued progress in the company’s restructuring efforts. Nonetheless, they are maintaining their Hold rating on the stock because of “ongoing top-line growth pressures.”


Positives expected in Hewlett-Packard’s free cash flow

Analysts Aaron C. Rakers, Joseph Quatrochi and Andrew Shinn said they expect to see Hewlett-Packard Company (NYSE:HPQ) maintaining its positive $7.5 billion fiscal 2013 guide for free cash flow. They continue to see the current fiscal year being HP’s “launching point” for next year’s expectations. The analysts believe the shift will be from strong working capital and benefits from realignment to top and bottom-line growth expectations. In their view, 2014 will be HP’s recovery and expansion year.

In Wednesday’s report, the analysts expect Hewlett-Packard Company (NYSE:HPQ) to show progress toward its plans of about a 26,000 reduction in head count by the end of this year. At the end of the second quarter, the company had reduced its work force by about 18,800.

HP expected to continue showing weakness

The analysts note that Hewlett-Packard will likely continue to show weakness in several areas. They said the company’s enterprise servers will likely continue to underperform compared to Dell Inc (NASDAQ:DELL)’s 10 percent year over year growth.

However, they believe HP will keep emphasizing the traction it is gaining in its Moonshot server line and focus on this being a growth driver for the 2014 fiscal year. They’re expecting follow-on product introductions in October and January.

Possible upsides for Hewlett-Packard

The Stifel analysts believe there are some possible upsides to Hewlett-Packard Company (NYSE:HPQ)’s next earnings report this week. Specifically, they see IPG results as being one of the best sources for possible upside in the third fiscal quarter of the year. They say product cycle would be the main driver of this upside and that the benefits for this will likely be more significant for the second half of the fiscal year.

Overall, the analysts say Wednesday’s results should be “another positive directional indicator” of the company’s overall realignment. However, they believe the bigger catalyst for Hewlett-Packard Company (NYSE:HPQ) will be the company’s analyst day, which is scheduled for Oct. 9.