Shares of HP Inc., the renowned manufacturer of personal computers and printers, experienced a significant decline in value after the company adjusted its earnings forecast. The primary factors contributing to this downward revision were weak demand in China and the need to maintain competitive prices. However, industry experts from Evercore ISI, led by Amit Daryanani, suggest that this challenging period could pave the way for long-term success.
Evercore analysts commend HP Inc. for effectively managing their profit margins, especially at the higher end of their product range. This achievement gives rise to the possibility of stronger earnings and increased cash flow in the coming fiscal year. Should there be a stabilization or, ideally, a recovery in demand across their PC and print segments, these positive outcomes are more likely.
Following the release of their third-quarter earnings report, HP Inc.’s stock plummeted by 7.9% to $28.90 during premarket trading. The company also revised its adjusted earnings guidance for the full fiscal year 2023, revising it from a previous range of $3.30 to $3.50 per share to a new range of $3.23 to $3.35 per share.
According to Evercore analysts, who assign an In Line (equivalent to Neutral) rating for the stock, HP Inc. has a price target of $33.
Meanwhile, analysts at Citi, led by Asiya Merchant, hold a less optimistic view. After reviewing the latest financial results, they have revised their price target for HP Inc.’s stock from $32 to $31. Their analysis suggests that while there are improving trends in PC demand, it is occurring at a slower pace than previously anticipated. In contrast, they anticipate that print headwinds will persist into the fiscal year 2024.
In summary, HP Inc. must navigate through these challenges in order to regain stability and achieve future growth. The outcome will heavily depend on market demand for their PC and print products, as well as their ability to address pricing pressures and other obstacles in the industry.
