HP's Analyst Day Is Here

• Hewlett-Packard Company’s (NYSE: HPQ) stock has declined 33.33 percent, year to date.
• Deutsche Bank’s Larry Zhong has maintained a Buy rating and a price target of $45 on the company.
• The company will host an Analyst Day on September 15 to provide details regarding the two new companies to be formed following the split.

At the Securities Analyst Day, to be held in San Jose, the company is expected to hold separate sessions for each of the two new entities, Hewlett Packard Enterprise and HP Inc. The management is also expected to offer long term targets for growth and margins for the two businesses.

“We continue to view the company's upcoming split as a positive catalyst for the shares and remain positive on the stock given its low valuation and our view that the company's enterprise business is an underappreciated growth and margin expansion story,” Zhong stated.

For HP Inc, Zhong believes that the management would highlight that the business could grow over time, driven by careful market positioning, market consolidation, share gains and new opportunities in areas such as 3D printing.

For Hewlett Packard Enterprise, the management is likely to provide details regarding cost cuts required in the Enterprise Services segment, while offering information on new opportunities and robust positioning in hardware.

“While we expect commentary to be upbeat, we anticipate that upcoming targets will be conservative, as we believe mgmt will want to be able to deliver on targets in order to provide further justification for the split,” Zhong elaborated.

Both companies are expected to be able to generate strong free cash flow of $3 billion in FY17, with free cash flow of $6-7 billion on a combined basis.