Citi Predicts: More Upside to Come for Hewlett-Packard

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Citigroup Inc. (NYSE:C) predicts further upside potential for the world’s largest technology company, Hewlett-Packard Co. (NYSE:HPQ), even though its stock has already outperformed the S&P 500 and climbed 30 percent in the last 12 months.

The results of a chief information officer survey suggest increased corporate spending on Hewlett-Packard services, which makes up just over a fifth of its sales. Consequently, Jim Suva, an analyst at Citigroup, upgraded the company on Wednesday from sell to buy.

Suva said¬†that the rest of Wall Street may be underestimating the benefits of Hewlett-Packard’s cost cutting and that negative earnings revisions may finally be behind the company.

“We anticipate that Hewlett-Packard’s earnings revisions are now likely to start increasing in 2014 for the first time in nine quarters,” Suva said.¬†However, Suva acknowledges this call may get some resistance, as Hewlett-Packard’s PC sales could be worse than anticipated and the benefits of higher spending on services may be slow to emerge or momentary.