HP analysts turn cautious as macro concerns challenge near-term potential

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  • Swiss credit analyst Shannon Cross retrogrades HP Inc. (NYSE: HPQ) from Outperform to Neutral with a price target of $33.

  • Cross believes revenue and margins are challenged in the near term by weakening consumer confidence, which accounts for about 50% of PC revenue.

  • She also expects pressure on ASPs due to lower demand and better supply, returning part of the margin expansion that began in 2019.

  • She predicts a short-term impact from slowing business demand for PCs and printing as IT budgets prioritize hybrid cloud, security and software solutions.

  • It also highlights macroeconomic uncertainty, which impacts purchasing decisions for 3D printing and commercial printing.

  • Citigroup analyst Jim Suva maintains neutral on HP and cuts price target from $33 to $31.

  • He will hear from PC and enterprise infrastructure vendors in the next two weeks.

  • The weakening end-demand environment for PCs, smartphones and printers amid regional macroeconomic and inflationary concerns in recent earnings is likely to remain critical areas.

  • Demand for enterprise infrastructure remains an area of ​​relative strength (Lenovo Group Ltd (OTC: LNVGY)), given the high levels of arrears.

  • But recent mixed reviews from Cisco Systems, Inc. (NASDAQ: CSCO) on weaker order growth and Advanced Micro Devices, Inc. (NASDAQ: AMD) and Dell Technologies Inc. (NYSE:DELL) last quarter in terms of order strength and corporate caution are notable.

  • He thinks macroeconomic concerns could have a significant impact on infrastructure demand in the coming quarters.

  • Order books and order visibility will be the areas of focus and cash generation/return on capital.

  • It cut estimates on HPQ and Dell based on weakening PC conditions.

  • Price action: HPQ shares traded down 0.31% to $29.34 when last checked on Friday.

Latest reviews for HPQ

Date

Solidify

Stock

Of

To

March 2022

Barclays

Maintains

Underweight

October 2021

Swiss credit

Maintains

Neutral

Sep 2021

JP Morgan

Downgrades

Overweight

Neutral

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