The early read on

Hewlett-Packard's

(HPQ) - Get Report

January quarter results is upbeat, with a slew of analysts predicting a penny or two of upside on the earnings front.

Most expect H-P to fend off an earnings slide, maintaining a flat profit in the April quarter -- a relatively decent outlook in a tough market.

The bottom line is that the market may have gone too bearish on the hardware company in the short term. Year to date, shares peaked at $20.85 on Jan. 10, but have since slipped 15% to $17.75, as of Monday's close.

But some analysts are arguing the company deserves more credit. "The highlights of the quarter should be the health in the

printers division and the reduction in the losses in the PC and enterprise systems businesses, which, for the most part, should reinforce the view that the first part of the acquisition integration is going well," says Walter Winnitzki, an analyst at First Albany, in a note issued last week. He believes earnings will total 28 cents, a notch above the consensus estimate of 27 cents.

Winnitzki downplayed concerns about an inventory build, saying he hadn't found any evidence of such a trend. First Albany has no banking relations with H-P.

Merrill Lynch is also gearing for H-P to beat expectations. The firm, which hasn't done recent banking for H-P, expects it to report January earnings of 29 cents, 2 cents above the consensus estimate. The bank's revenue projection for the period, at $18.7 billion, also tops the consensus outlook for $18.46 billion.

Merrill believes guidance will be reasonably good for what's typically a down quarter, predicting H-P will back existing Wall Street expectations for the April quarter. The estimates assume H-P can hold earnings flat, with revenue dipping only a couple of percentage points.

If H-P can pull that off, it will mark an improvement under the usual seasonal patterns, which typically reflect a profit slide in the spring. Merrill's Steve Milunovich believes cost savings from the merger could provide the incremental lift to earnings.

Assuming H-P does stick to consensus numbers, its outlook would look relatively solid compared with its rivals. For the quarter now under way,

IBM

(IBM) - Get Report

expects sequential sales to fall in the double digits, while

Sun

(SUNW) - Get Report

hasn't given any guidance at all.

Lexmark

(LXK)

has geared for revenue growth in the mid- to low-single digits.

"Given the cautious forecasts from IBM, Sun and Lexmark, investors seem to expect a pessimistic view from H-P for the April quarter," says Milunovich. "We think these expectations tilt the risk-reward toward the upside if

guidance from Ms. Fiorina comes across as only mildly conservative or better."

Winnitzki too believes H-P can hold its profit flat for the April quarter, though he thinks the sales outlook may be a little more conservative.

In a note last week, he predicted H-P shares could see some postearnings upside. "Given that the share price is already discounting some concerns relative to the tone of business and inventory levels, we could see some positive reaction in the share price following the Q1 report card, if we are correct relative to management's comments on these issues," he writes.