What to Expect When HP Reports After the Close

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HP Inc. (NYSE: HPQ) is scheduled to release fiscal fourth-quarter financial results after markets close on Tuesday. The consensus estimates are calling for $0.58 in earnings per share (EPS) and $15.27 billion in revenue. The same period from last year had $0.54 in EPS and $15.37 billion in revenue.

A $30 billion offer from Xerox to acquire HP was refused last week by HP’s board of directors. In its letter, HP said it had “unanimously concluded that [the offer] significantly undervalues HP and is not in the best interests of HP shareholders.”

Xerox had offered $22 a share in cash and stock for HP, $17 in cash and 0.137 shares of Xerox stock. The offer represented a premium of 21% to HP’s stock price at the time and had a total value of more than $30 billion.

HP’s management should not be shocked, however, at Xerox CEO and Vice-Chair John Visentin’s promise to launch a campaign to win over HP shareholders. Visentin clearly stated his intention:

Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders. The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction.

Excluding Tuesday’s move, HP has underperformed the broad markets with the stock down about 1.5% year to date. In the past 52 weeks, the stock is down closer to 10.5%.

A few analysts weighed in on HP ahead of the report:

  • Evercore ISI has an Outperform rating with a $24 price target.
  • Goldman Sachs has a Sell rating with a $14 price target.
  • Argus has a Hold rating.
  • Morgan Stanley has an Equal Weight rating with a $20 price target.
  • Credit Suisse has a Neutral rating with an $18 price target.
  • Merrill Lynch has an Underperform rating with a $16 price target.
  • Loop Capital has a Hold rating with a $19 price target.

Shares of HP were last seen down 1% at $19.91, with a 52-week range of $15.93 to $24.17. The consensus analyst price target is $19.95.

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