HP (HPQ) Stock Slips After Wells Fargo Downgrade to Underweight, Analyst Sees a Period of Underperformance

August 19, 2022 9:09 AM EDT
Get Alerts HPQ Hot Sheet
Price: $25.04 -2.23%

Rating Summary:
    10 Buy, 22 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 11 | Down: 11 | New: 34
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Shares of HP Inc. (NYSE: HPQ) are down nearly 4% in premarket Friday after Wells Fargo analyst Aaron Rakers downgraded to Underweight from Equal Weight with a $30 per share price target.

The analyst believes the chances of HP shares experiencing underperformance through the remainder of 2022 and into 2023 are “increasing.”

“While we maintain a positive view on HP's strong FCF and execution on driving a richer portfolio mix (commercial PCs, consumer premium/gaming, peripherals, Instant Ink, etc.), we think deteriorating PC demand and macro sensitivity in print could result in material downward est. revisions,” Rakers said in a client note.

Wells Fargo analyst is also concerned about potentially slowing share repo activity due to the all-cash takeover of Poly for $3.3 billion. Rakers also reminds investors that the company's net debt position stands at an all-time high of $4.512 billion.

Within the IT Hardware sector, Rakers prefers Dell (NYSE: DELL) and Pure Storage (NYSE: PSTG).

By Senad Karaahmetovic

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Wells Fargo, Senad Karaahmetovic