HP Rises Ahead of Results

Morgan Stanley didn’t wait for good results from HP to say nice things about the company.

HP, which will report quarterly results after the close on Monday, gained 3.8% Friday after Morgan Stanley analyst Kathryn Huberty upgraded the company’s stock on the strength of its growing software portfolio, thanks to acquisitions like Mercury Interactive, Neoware and Opsware.

Those next-generation capabilities will drive HP’s results in 2009, said Huberty, and she raised her 2009 earnings estimates to $3.85 a share, above $3.70 Thomson Financial consensus estimates.

In the short-term, Huberty said she’s expecting solid results and in-line guidance on Monday, and other analysts agreed that HP should weather the slowdown in U.S. enterprise spending better than other technology companies.

Analysts expect October quarter earnings of 82 cents a share from HP on an 11.5% increase in sales to $27.4 billion. Current quarter earnings and guidance are expected to be 77 cents and $27 billion.

Stocks gained during Friday’s trading session, as strength in HP and a $10 billion share buyback from Cisco Systems outweighed bad news from FedEx and Fannie Mae. Cisco gained 2%.

Salesforce.com surged 13% on its results and Intuit gained 3.5% on its numbers, but BEA Systems slipped 2% on declining license sales.

Garmin jumped 16% after withdrawing its bid to acquire Tele Atlas.

Expedia and VeriSign jumped on upgrades.

AMD lost ground despite news of a big investment.

The Nasdaq rose 18 to 2637, the S&P gained 7 to 1458, and the Dow added 66 to 13,176. Volume rose to 4.13 billion shares on the NYSE, and 2.52 billion on the Nasdaq. Decliners led by an 18-15 margin on the NYSE, and 15-13 on the Nasdaq. Upside volume was 52% on the NYSE, and 60% on the Nasdaq. New highs-new lows were 38-376 on the NYSE, and 51-252 on the Nasdaq.