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shares rose in Wednesday trading, as the company was upgraded to "buy," based off continued efforts from CEO Meg Whitman to turnaround the company.

Whitman has trying to restructure HP since she was named CEO in September 2011. HP has reduced costs by $3 billion as its staff is reduced by 10% or 29,000 employees, the Citi analysts wrote. These changes have allowed Hewlett-Packard to generate free cash flow, which is expected to reach $7.5 billion this year. "We see a key infliction point ahead," said analyst Jim Suva, who has a $32 price target on shares.

"We note that during the past 10 years HPQ shares have traded at an average of 11x but we believe the discount to 8x is warranted as the company is in the middle of a turn around," the analysts wrote.

Citi noted the company has managed to retreat from past strategies which had left it vulnerable.

The company is turning around its computing business, which is in a secular decline. Citi's analysts predict computer sales to drop 13% this year and an additional 6% in 2014. Computers represent a quarter of HP's but only accounts for 9% of HP's operating costs. That's down from 2008, when computer sales accounted for 20% of of operating costs.

The analysts doubt that HP will risk investing through acquisitions. HP lost profits in 2011 after acquiring UK-based Autonomy for $11.7 billion. The transaction was later discovered to be rife with misinformation. "We do not expect this to be a material concern in the near-term," the analysts wrote in their note.

The Palo Alto-based computer company rose 1.8% Wednesday, closing at $25.93. Shares have gained 81.7% year-to-date, sharply outperforming the S&P 500.

-- Written by Robert Arenella in New York

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Robert Arenella