Goldman Sachs Reiterates Neutral Rating on HP, Inc. (HPQ)
Goldman Sachs analyst Michael Ng reiterated a Neutral rating and $33.00 price target on HP, Inc. (NYSE: HPQ)
The analyst comments "HPQ’s F3Q24 EPS of $0.83 missed GS/consensus (FactSet) as a miss in Print revenue and margins more than offset a beat in Personal Systems revenue and margins (6.4% v. GS/consensus 6.5/6.1%). First, Print revenue and margins missed, reducing our confidence in HPQ’s ability to sustainably achieve high-end of L/T margins. F3Q24 Print revenue declined 5% qoq, missing guidance of -LSD% qoq with margins of 17.3% also missing guidance for the upper half of its L/T range of 16-19% (and GS/consensus of 19.0/18.5%). Print is facing pricing competition, partly due to JPY weakness. HPQ expects F4Q24E Print revenue to increase LSD-MSD% qoq (2016-19 average +3% qoq), benefiting from industrial printing and sequential growth in Supplies. Second, PC outperformed, but F4Q24E revenue guidance reflects continued softness in consumer demand. HPQ expects F4Q24E Personal Systems revenue to increase LSD-MSD% qoq (2016-19 average +7% qoq) on demand headwinds to consumer, which seasonally represent a greater portion of total shipments in F4Q. That said, we are encouraged by expectations for >10% of HPQ's F2H24 PC shipments to be AI PCs and for consumers to have faster adoption rates of AI PCs. Commercial was a bright spot with evidence of enterprise PC refresh demand. Third, despite cautionary comments around Print and PCs, long-term trends remain intact. HPQ only modestly reduced the mid-point of its F2024 EPS outlook to $3.40 ($3.35-$3.45 range) from $3.45 prior ($3.30-$3.60 range) and it reiterated its F2024 FCF outlook of $3.1-$3.6 bn and 100% FCF return to shareholders."
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Shares of HP, Inc. closed at $34.76 yesterday.