HP Inc. (NYSE:HPQ) shares traded little changed Wednesday after the company posted a quarterly profit beat and stronger-than-expected sales.
Investors also weighed management’s cautious tone on the year ahead as component costs and margin pressures remain in focus.
Earnings Snapshot
On Tuesday, the company reported first-quarter adjusted EPS of 81 cents, which beat the analyst consensus estimate of 77 cents.
Sales rose 6.9% year over year (Y/Y) to $14.4 billion, surpassing the analyst consensus estimate of $13.9 billion.
Analysts’ Take
Bank of America Securities analyst Wamsi Mohan reiterated an Underperform rating on the stock, lowering the price forecast from $18 to $16, citing slower PC demand, memory-driven margin pressure, and leadership transition uncertainty.
As memory costs have “doubled” from the initial 40%-50% increase baked into the guide, the analyst projects the firm will lower its 2026 guide.
He noted earnings and free cash flow expectations remain intact, though management signaled results may land near the low end.
The analyst said cost controls, restructuring actions, and lower other income and expenses are expected to offset margin pressure.
He explained mitigation efforts include pricing adjustments, new component sourcing, supply-chain coordination, and inventory management.
According to Mohan, margins weakened due to a “higher mix of education” and consumer mix despite solid revenue growth.
The analyst described Print performance as “stable”, supported by pricing actions and cost discipline despite weaker hardware volumes.
He said full-year Print margins should benefit from earlier pricing changes and improved product mix.
Mohan raised revenue and earnings estimates slightly but lowered the price target to reflect cautious long-term expectations.
HPQ Price Action: HP shares were up 0.16% at $18.23 at the time of publication on Wednesday. The stock is trading near its 52-week low of $18.00, according to Benzinga Pro data.
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