Jefferies upgraded Hewlett-Packard Company (NYSE: HPQ) from a Hold to a Buy and raised its price target to $41 from $37 based on an upcoming recovery in free-cash flow in 2016 and 2017. The firm argued that FCF will recover as a result of fewer non-recurring items, such as separation costs and capital expenditures.

The note, Jefferies said, came following recent investor meetings with Hewlett-Packard.

Jefferies reduced its 2016 EPS expectations, however, the analysts said they believe that the price of shares already account for that expectation. The firm said its 2016 EPS expectations are 14 percent below consensus, but that compares to a FCF expectation that is 10 percent above consensus in 2015.

Jefferies also noted that Hewlett-Packard's future catalysts could push shares higher. Namely, the firm pointed to the Q2 earnings call in August, two analysts days (one for each company) in September, the investor roadshow prior to the split, and FCF guidance on Q4 on the November earnings call.

And, while some investors may be concerned about the PC market, Jefferies said that even a "significant deterioration" only results in a 5 to 11 percent EPS downside.

Shares of Hewlett-Packard was trading more than 1.5 percent higher in the premarket to $31.64.

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