HP, Inc. (HPQ): PCs Better But May Not Be Sustainable - BMO

BMO Capital analyst, Tim Long, reiterated his Market Perform on HP, Inc. (NYSE: HPQ) after the company issued weaker than expected guidance on its earnings call. Management took down the high end of the full-year guidance range in anticipation of increased placement of low-margin printer hardware, with the expectation that this will drive the supply of sales in later quarters.

Revenue was $11.9 billion, higher than our/consensus estimates of $11.3 billion/$11.4 billion. Similarly, EPS was $0.48, above consensus of $0.44, and higher than the previous outlook of $0.43-$0.46. Most of the upside was driven by faster-than-expected progress on the divestiture, pulling some of the gains from Q4 into Q3.

HPQ gained 180 bps of market share in the global PC market, on strong demand for gaming PCs and Chromebooks. Segment revenues were flat y/y, representing the best growth performance since early FY15. However, the analyst remains concerned that the broader market continues to decline and revenue growth is going to remain firmly negative.

PT goes to $13 from $12 on 8x FY2017 EPS.

We remain on the sidelines given the headwinds in both end markets.price target of $13.00

For an analyst ratings summary and ratings history on HP, Inc. click here. For more ratings news on HP, Inc. click here.

Shares of HP, Inc. closed at $14.40 yesterday.

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