Breaking News: HP Inc. (HPQ) Maintains Hold Rating with $32.00 Price Target, Despite Fiscal Q3 Earnings Miss
TD Cowen has reaffirmed a Hold rating on HP Inc. (HPQ) with a price target of $32.00 following the company's fiscal third-quarter earnings report. The results slightly missed market expectations due to weaker demand in the Printing segment and increased price competition impacting operating margins.
HP's PC demand remains steady, with AI-enabled PCs expected to drive higher volume sales. The company is accelerating cost restructuring plans to maintain its free cash flow target for fiscal year 2024. Additionally, HP announced a $10 billion share buyback program to enhance shareholder value and demonstrate confidence in its financial strategy.
Despite challenges in the Printing segment, HP's commitment to cost restructuring and AI-enabled PCs is seen as strategic moves for financial stability. The company reported a 2% year-over-year revenue increase, driven by the Personal Systems segment, marking its first revenue growth in nine quarters.
Looking ahead, HP anticipates a low to mid single-digit percentage increase in Print revenue for the fourth fiscal quarter, supported by industrial printing and Supplies growth. The company also projects a similar revenue increase in the Personal Systems segment, with over 10% of PC shipments in the second half of fiscal 2024 being AI-enabled.
HP slightly adjusted its fiscal 2024 EPS forecast and reaffirmed its free cash flow forecast and commitment to return 100% of free cash flow to shareholders.
InvestingPro Insights:
- HP has a market cap of $34.01 billion and a competitive P/E ratio of 12.19.
- The company has a history of raising dividends for 7 consecutive years and maintaining dividend payments for 54 consecutive years.
- HP's strategic efforts in the Technology Hardware industry, such as AI-enabled PCs, could benefit its financial health.
- Investors can access additional tips and metrics on HP's investment profile through InvestingPro.
In summary, despite some challenges in the Printing segment, HP's focus on cost restructuring and new initiatives like AI-enabled PCs and share buybacks demonstrate a proactive approach to sustaining financial stability and growth. Investors should consider HP's valuation, dividend history, and strategic efforts when evaluating the company's investment potential.