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Anticipating HP Earnings: Emphasis on Revival of PC Market; Q3 Revenue Expected to Drop

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HP Inc (NYSE:HPQ) is projected to experience a more than 8% decrease in third-quarter revenue, as cautious consumers and corporate clients delay their orders for electronic products amidst a sluggish economy.

The PC manufacturer is expected to report an Earnings Per Share (EPS) of $0.86, with the market paying close attention to HP’s outlook and comments regarding PC market trends for the second half of the year.

Third-quarter revenue is forecasted to reach $13.40 billion, marking the fifth consecutive quarter of sequential decline.

Following the surge in demand for PC sales and other electronic devices driven by the pandemic-induced work-from-home trend, companies like HP and Lenovo are now grappling with a slow recovery in the PC market in recent quarters.

According to research firm IDC, global PC shipments in the second quarter decreased by 13.4% year-over-year, signifying the sixth consecutive quarter of contraction due to macroeconomic challenges, weak demand, and a shift in IT budget spending.

The sales for HP’s Personal Systems segment, which provides commercial and consumer desktop and notebook PCs, dropped by 29% during the second quarter, with the company cautioning that the macro environment will remain challenging in Q3. Sales for its printing segment also declined by 5%.

However, some analysts are optimistic about the recovery of the PC market and believe that it β€œcould pleasantly surprise the market in the near-to-medium term.”

Analyst Erik Woodring from Morgan Stanley stated that it seems the PC industry is beginning to rebound after the post-COVID slowdown.

saupload Screenshot HP 2023 08 28 125158

Over the past two years, HP, based in California, has exceeded EPS estimates 75% of the time and revenue estimates 38% of the time.

Analysts from Seeking Alpha, Wall Street, and Seeking Alpha’s Quant ratings all consider the stock a β€œhold.”

HP, with a market value of over $30 billion, has seen a growth of over 17% this year.

Over the last three months, EPS estimates have experienced six upward revisions and six downward revisions. Revenue estimates have seen two upward revisions compared to eight downward revisions.

Source: Benzinga.com

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