Barclays cuts HPQ on secular challenges and a ’lack of catalyst’

Investing.com -- Barclays has downgraded HP Inc., warning that a combination of secular headwinds, a weakening memory cycle and limited catalysts will likely keep the stock under pressure through 2026.

Analyst Tim Long told investors in a note that “while we see the stock as inexpensive (~7x P/E), we believe secular challenges across both PCs and Printing, combined with a lack of catalyst, will cause the stock to remain pressured in 2026.”

Barclays lowered its price target on HPQ to $18 from $24, applying a 6x multiple, down from 8x, on its unchanged FY27 earnings estimate of $3.03.

Long says the firm views a 6x valuation as “reasonable, given the acute memory cycle and flattening PC refresh.”

The note highlights that the current memory downturn is unusually severe. “The degree and intensity of the current cycle could pressure units materially worse than prior cycles,” Barclays says, adding that while there may be a short-term pull-in from customers securing inventory at known prices, “we expect demand could degrade.”

The bank also points to potential supply and pricing issues in the second half of 2026.

On the PC side, Barclays sees little remaining benefit from the operating-system transition. “The WIN11 refresh is largely done in the U.S.,” the analysts write, noting that with about 60% captured, the cycle is nearing the point where “the refresh opportunity starts to asymptote.”

Barclays also warns of “further margin degradation on both the gross and operating lines,” driven by memory supply issues and competitive pressures.

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