HP’s Market Challenges and Transformation Efforts Lead to Hold Rating

HP (HPQ – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Jim Hin Kwong Au from DBS downgraded the rating on the stock to a Hold and gave it a $28.20 price target.

Jim Hin Kwong Au has given his Hold rating due to a combination of factors affecting HP’s current market position and future prospects. The company faces challenges from weakening demand in its end markets and a prolonged period of underperformance in its printing business. These issues have led to a downward revision of the company’s earnings forecast for FY25, with EPS expectations reduced to USD 3.00–3.30 from the previous USD 3.45–3.75.
Despite these challenges, HP has shown some positive developments, such as better-than-expected revenue driven by increased commercial PC sales and initiatives to transform its business model towards subscription-based services. However, intense competition in the PC market and declining demand for traditional printing continue to pose risks to its market share and profitability. Consequently, while HP’s stock trades at a lower forward P/E ratio compared to its peers, the rating remains at Hold due to these ongoing market pressures.

In another report released yesterday, Bank of America Securities also reiterated a Hold rating on the stock with a $29.00 price target.

Based on the recent corporate insider activity of 35 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HPQ in relation to earlier this year.