RBC Sees Some Positives from HP's (HPQ) Q3 Report, but Thinks More is Needed
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RBC Capital affirms its Sector Perform rating and $14 price target on HP, Inc. (NYSE: HPQ) following Q3 results on Wednesday.
Analyst Amit Daryanani commented,
HPQ reported a strong Jul-qtr print but guided down Oct-qtr and tempered FCF expectations for Oct-qtr as well. Fundamentally, we see HPQ struggling on both the PC and Printing fronts, with PCs likely to see a confluence of cyclical and secular challenges in Oct-qtr (expect downtick q/q) and Printing going through a business model change that could result in a lower market share (while we still await benefits from the positive NPV hardware units driving some stability within supplies).
We expect HPQ stock to move in sync with its FCF generation, which we suspect may remain challenged over the next two quarters given: 1) Oct-qtr headwind from mix and inventory pre-buy; and 2) Jan-qtr is seasonally a negative FCF quarter.
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