HP closed at 52-3/4, up three full points from yesterday. The computer equipment giant saw its stock rise despite posting lower-than-expected earnings for the fourth quarter yesterday.
The stock got a boost from Merrill Lynch's George Elling, who raised his 1997 year-end estimate to the higher end of $3 a share. His earlier estimate had placed Hewlett-Packard's year-end estimate between $2.75 to $3 a share.
"This revision reflects that [HP] had a 15 percent growth in orders in the fourth quarter, and that bodes well since 20 percent of that growth was in the computer segment," Elling said. "As a result, I felt more confident to use the higher range."
Hewlett-Packard said yesterday that profits fell four percent in the latest quarter despite higher sales and orders. The maker of computers, printers, and other high-technology equipment earned $648 million, or 62 cents a share, in its fiscal fourth quarter that ended in October, down from $678 million or 64 cents a share a year ago. Sales rose 12 percent to $10.1 billion from $9 billion for the year-ago period.
The profit was slightly below Wall Street's estimate of 64 cents a share, according to First Call, which tracks analyst forecasts.
"We're encouraged by the rebound in order growth this quarter, but somewhat disappointed with our earnings," Chairman Lewis Platt said, in a statement. "Our disappointment is tempered by the fact that this was a tough comparison with very strong earnings growth in last year's fourth quarter.
"Revenue growth fell a bit short, due largely to sluggish order growth in the prior quarter. But we're quite pleased with the substantial reduction in operating expense growth, which shows that we moved quickly to adapt to changing business conditions."
Hewlett-Packard said orders rose 15 percent in the fourth quarter to $10 billion. U.S. orders grew 10 percent to $4.7 billion, and orders from outside the United States increased 20 percent to $5.3 billion.
In the company's computer business, orders increased 20 percent to $8.2 billion. Hewlett-Packard orders for HP NetServer systems and HP Pavilion multimedia home computers showed very strong growth, as did computer networking products. However, demand for mobile PCs was weak.
Orders for HP 9000 servers were also higher, but orders for workstations were weak.
Hewlett-Packard said its LaserJet printers posted moderate overall order growth and orders for scanners, especially the low-cost HP ScanJet 4p scanner, were very strong.
Inkjet products achieved strong order growth and orders for Inkjet printer supplies were also strong.
For the fiscal year, net earnings rose 6 percent to $2.6 billion, or $2.46 a share, from $2.4 billion or $2.31 a share in fiscal 1995. Sales grew 22 percent to $38.4 billion from $31.5 billion. Orders totaled $38.9 billion, up 19 percent over the prior year.
Reuters contributed to this report.