UPDATE: Hewlett-Packard (HPQ) Est., PT Bumped Higher at BMO Capital

BMO Capital analyst Keith Bachman bumped estimates and his price target on Market Perform-rated Hewlett-Packard (NYSE: HPQ) to 38.00 (from $37.00) on money flows and multiple expansion.

Bachman said, "For the April quarter, we believe that revenue and EPS will be in line with consensus, though we do see some upside tension in EPS estimates vs. our/consensus of $0.88. We don’t think HP will change its FY14 EPS guidance. We project enterprise systems revenue to decline by 4% q/q, owing to lower Moonshot orders compared with the past two quarters, even with some share gains in racks, blades, and towers at the expense of IBM. However, we think HP’s enterprise systems margins could improve modestly q/q due to lower relative Moonshot revenue. We believe that services operating margins will increase q/q to 2.9%, from ~1% in the January quarter, and vs. 2.5% in the April 2013 quarter. As we stated in our report “Going Deep on HP, More Room for the Multiple” dated Feb 13, 2014, we think that HP services will be the key driver of growth in operating profit dollars longer term. We think that HP’s business mix is comparable to Capgemini, which earns close to 9% operating margins and, longer term, we believe that HP can reach the same margin levels."

The firm raised FY14 EPS estimate to $3.68 from $3.65 (consensus of $3.71), and raising our FY15 EPS estimate to $3.78 from $3.76 (consensus of $3.85).

For an analyst ratings summary and ratings history on Hewlett-Packard click here. For more ratings news on Hewlett-Packard click here.

Shares of Hewlett-Packard closed at $33.11 yesterday.

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