UPDATE: Wells Fargo Downgrades HP, Inc. (HPQ) to Underweight
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(Updated - August 19, 2022 9:02 AM EDT)
Wells Fargo analyst Aaron Rakers downgraded HP, Inc. (NYSE: HPQ) from Equal Weight to Underweight with a price target of $30.00 (from $35.00).
The analyst commented, "We think there is increasing scenario in which HP shares could see relative underperformance through the remainder of 2022 and into 2023. 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. We also question whether the pace of HP's share repo activity could slow as the company moves toward the close of its $3.3B (all-cash) acq. of Poly and the company's net debt position stands at an all-time high at $4.512B. We're reducing our fiscal 2022, 2023, and 2024 ests. from $65.9B / $4.30, $63.8B / $4.61, and $65.2B / $5.31 to $63.4B / $4.20, $60.4B / $4.37, and $62.2B / $5.19, respectively. Our new $30 PT reflects a ~7x C2023 EV/EBIT (a modest discount vs. 5-yr. median at ~8x)."
Shares of HP, Inc. closed at $35.23 yesterday.
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