"Strong integration planning can minimize the risks associated with failure and thereby shift the balance in favor of a deal," Institutional Shareholder Services said in its report.
The recommendation by ISS, an adviser to major money managers and pension funds, has long been considered crucial to the passage of the hotly contested $22 billion merger.
"I think the momentum is clearly moving in our favor," HP Chief Executive Carly Fiorina said Tuesday in a conference call. "We think their recommendation will be viewed as a crucial milestone by many."
ISS's decision likely means that the battle over the merger will remain heated and the outcome unclear until shareholders vote later this month. On the other hand, a "no" vote would have significantly increased the chances that the merger would have failed.
Descendants of HP's founders, who hold 18 percent of the company's shares, have already announced their opposition to the deal.
Walter Hewlett, a member of HP's board, has been one of the deal's most vocal critics. Topping his list of concerns is that HP would become too exposed to Compaq's low-margin PC business, but he has also touched on subjects such as executive pay.
The ISS report takes HP to task for attacking Hewlett personally.
| "I think the momentum is clearly moving in our favor." ="" class="t2">-HP Chief Executive Carly Fiorina |