By Jordan Faigen

On May 22, investors received (what seemed like) a double dose of disappointing news from the information technology corporation Hewlett-Packard Company (NYSE:HPQ).

Hewlett-Packard in the News

The company reported earnings of 88 cents per share on revenue of $27.3 billion, failing to meet Street expectations of $27.43 billion. Hewlett-Packard Company (NYSE:HPQ) also revealed that revenue was down more than 1% in the second quarter, continuing their string of consecutive quarterly revenue declines for the 11th straight quarter.

One top of these disappointing numbers, Hewlett-Packard Company (NYSE:HPQ) announced that they will be cutting 16,000 jobs as part of CEO Meg Whitman’s strategy to turn around the company. She believes that this is another way to cut costs and she is confident that she is making the right move, explaining, “I would say I’m feeling more confident because we have seen a stabilization of revenue. The high single-digit declines are over.”

What Does This Mean for Hewlett-Packard Stock?

Hewlett-Packard

UBS analyst Steven Milunovich recommends HOLD Hewlett-Packard with a $34 price target after disappointing quarterly news. He noted that the company’s, “1 percent year over year loss in revenue was also disappointing. However the target price raise comes off of the savings from restructuring.” Milunovich has a -4.7% average return on the stock, earning him an overall average return of 0.0% and a 43% success rate of recommendations.

Analyst Brian White of Cantor Fitzgerald agrees with Milunovich’s HOLD rating and viewed the quarter as “sub-par”. He thinks that, “another restructuring initiative, and an increase in headcount reduction does not bode well for Hewlett-Packard.” White even questions how competitive the company’s portfolio really is. White has earned a -49.4% average return on the stock, earning a +0.7% average return per recommendation and a 53% success rate of recommendations.

On the other hand, analyst Ananda Baruah of Brean Capital reiterated his BUY Hewlett-Packard rating and $40 price target. Baruah noted, “Last night’s April Q results were confirmation of: 1) a more stable PC market relative to past Q’s (largely led by Commercial business), 2) improved cost management in Printing, leading to solid Op margins of 19.5% 3) robust FCF generation which underpins our capital allocation framework – particularly our contention of upside to stock buybacks to perhaps $3B in FY14 (vs. $2B), and 4) a continued improvement in the balance sheet.” Baruah also sees the cut in additional jobs as an opportunity to reinvest in growth, or pass through to the bottom line. Baruah has a +8.9% average return on the stock, helping him earn an overall +7.5% average return per recommendation, with a 58% success rate of recommendations.

Conclusion

The latest Hewlett-Packard Company (NYSE:HPQ) news may not sound like good news. But, some analysts are actually viewing the disappointing numbers and job cuts as potential advantages for the company.

Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]

Via: Tipranks