HP's Execution, International Sales Compensating for U.S. Economy; Maintaining Buy

5/21 - "Buoyed by a strong international presence in fast growing markets, a rich mix of IT product lines, and continually improving cost discipline, HPQ is demonstrating its ability to outperform even in a somewhat challenged macro environment. Consequently, we reiterate our Buy rating and $57 target based on 16x our F08 EPS of $3.56."

"Margin improvements continued with GM of 24.8% (up 30bps seq.) and op. margin of 10.0% (up 10bps seq.) due to continued favorable component environment, disciplined pricing and cost controls...Geographically, 69% of revenue was generated outside the US (similar to F1Q) and continued to provide a positive offset to a domestic market characterized as “somewhat spotty” (although we would not interpret the comments to be as profoundly negative)."

"On a segment basis, PSG (Personal Systems Group) was up 16% y/y with units up 21%; IPG ...