Shares of HP (HPQ) declined in pre-market trading after the information technology company reported mixed results for the Fiscal fourth quarter, with guidance that left investors disappointed. Following the results, CEO Enrique Lores addressed potential tariffs and their impact in an interview with Yahoo Finance, noting that some costs may inevitably be passed on to consumers.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
However, he added, the company needs to “wait and see what the final tariffs are for us to define what the exact plan is going to be.” Tariffs could significantly impact HP due to its development, manufacturing, and operations spanning multiple countries.
HP Delivered Mixed Performance in Key Business Segments
In the fourth quarter, HP showed mixed results across its key business segments. Consumer PC sales fell by 4% as cautious buyers awaited new AI-enabled computers and prioritized spending on experiences. Meanwhile, commercial PC sales grew by 5% year-over-year, although operating margins in the PC segment dropped significantly.
Overall, the PC market continues to slow, with global shipments falling 2.4% in Q3, according to IDC data. The slowdown is attributed to higher costs and inventory adjustments, though demand for PCs remains.
Surprisingly, HP’s printing business grew 1% year-over-year, outperforming expectations. Lores attributed this growth to HP gaining market share, potentially at the expense of rival Xerox (XRX), which is undergoing restructuring. However, Lores cautioned that the overall print market may see a slight decline by 2025.
Citi Analyst Lowers Price Target on HPQ
Following the mixed Q4 results, Citi analyst Asiya Merchant reiterated a Hold rating but reduced the price target from $37 to $36.50. In a research note, Merchant explained that higher commodity costs are weighing on PC margins in the short term. However, the analyst expressed optimism, anticipating a rebound in the PC market in the coming quarters, with improving margins driven by cost-management initiatives and pricing strategies.
The analyst’s lowered price target implies a downside of 6.6% from current levels.
Is HPQ Stock a Buy?
Analysts remain sidelined about HPQ stock, with a Hold consensus rating based on three Buys, nine Holds, and one Sell. Over the past year, HPQ has increased by more than 40%, and the average HPQ price target of $35.85 implies a downside potential of 8.3% from current levels.
