HP Inc. Rides High, Yet Faces Challenges Ahead
HP Inc. (HPQ), based in California and valued at $35.6 billion, is a prominent technology company that specializes in personal computing, imaging, and printing solutions. The diverse range of products helps meet the needs of consumers, businesses, and government entities around the world.
Stock Performance: Outpacing and Challenging the Market
Over the past year, HPQ has performed slightly better than the market, with shares rising 36.6% compared to a 36.4% increase in the S&P 500 Index ($SPX). So far in 2024, HPQ has gained 24.1%, but this lags behind SPX’s 25.2% year-to-date performance.
In detail, HPQ has outperformed the Technology Select Sector SPDR Fund’s (XLK) 35.8% gain over the past year and its 23.4% return so far this year.
Recent Earnings Report Shows Strong Revenue
On August 28, HPQ released its Q3 earnings report, resulting in a share price increase of over 2% the following trading day. The company reported revenue of $13.5 billion, exceeding analyst expectations of $13.4 billion. Adjusted earnings per share (EPS) were reported at $0.83. For Q4, HPQ projects adjusted EPS to fall between $0.89 and $0.99, expecting a full-year adjusted EPS between $3.35 and $3.45.
Analyst Expectations and Historical Context
Looking ahead to the current fiscal year, which ends in October, analysts forecast HPQ’s EPS to increase by 3.4% year-over-year, reaching $3.39. The company has had a mixed history of meeting earnings expectations, beating or matching consensus estimates in three out of the last four quarters.
Thirteen analysts currently cover HPQ, giving it a consensus rating of “Hold,” a drop from “Moderate Buy” two months prior. This consensus includes three “Strong Buy” ratings, nine “Holds,” and one “Strong Sell.” Just two months ago, the stock saw five “Strong Buy” ratings, indicating a slight shift in market sentiment.
Citi’s Downgrade Signals Caution
On October 1, Citigroup Inc. (C) downgraded HPQ from “Buy” to “Neutral” while maintaining a price target of $37. This downgrade reflects a cautious view on the recovery of the PC market in the latter half of 2024. Citigroup analysts also suggest that HP’s potential gains from artificial intelligence might not materialize until 2026 or 2027. Furthermore, ongoing challenges in its printing segment, driven by price competition in the hardware sector and a slowing Chinese economy, may hamper growth forecasts.
HP currently trades above its average price target of $35.69, while the highest target on the Street is $42, suggesting a modest upside of 12.5% based on current trading levels.
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On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
