HPQ + AAPL= Katy en feu

Morgan Stanley’s Katy Huberty was on CNBC a short while ago on the “Fast Money Halftime Report,” talking with Michelle Caruso-Cabrera in what the anchor characterized as a rare TV appearance, about her upgrade today of Hewlett-Packard  as well as positive remarks about Apple .

Huberty, pressed on the lack of growth, still, at HP, told Caruso-Cabrera and the gang on Halftime that it doesn’t matter “for the next nine months” because improving free cash flow is the issue that investors will care about:

We think Meg [Whitman, HP's CEO] is healing the brand, healing morale, and the company will top its free cash flow guidance by 35% this year, which will contribute to accelerating cash returns to HP investors. What you saw in fiscal Q1 [ended in January] was the co reported free cash flow of $2.1 billion, versus their forecast for $5 billion for the year, so they’ve already executed on better free cash flow, we think they can hit $6.7 billion. We think Meg is focusing the team on better free cash flow rather than prior executives’ focus on revenue. Meg is taking a different tack. She’s focusing the team on rigorous process around capital investments. I don’t think they need to grow revenue in next nine months. At the analyst day in October, they will have to answer that question [of growth]. But you see already they are moving away from Wintel PCs, they are taking share in printers, they are offering new power-efficient servers selling into internet data centers. But I wouldn’t expect to see revenue growth in next 12 months.

Asked about Apple, Huberty, who has an Overweight rating on the stock and a $630 price target, predicted a big comeback for the company with software features for the iPhone, including a “killer feature“:

I do believe that AAPL is approaching a bottom. As you have heard, they are talking about returning more cash, and we think they will do that in coming weeks. But people don’t own AAPL for that, they own AAPL for innovation. You saw the Samsung Galaxy S4 come out last week, that shows you the innovation cards are up for grabs. What is lacking in that product [the S4] is a killer feature. We think that’s where Apple will surprise this year. This [iPhone] 5S cycle this year will be about a killer feature that drives consumers increasingly to the platform, and that increases the value of those 500 million accounts.