Jim Hin Kwong Au, an analyst from DBS, has initiated a new Buy rating on HP (HPQ).
Jim Hin Kwong Au has given his Buy rating due to a combination of factors including HP’s strategic transformation and market positioning. HP is shifting towards a subscription-based model, which is expected to provide more stable revenue streams and improve operating margins, particularly as this model extends from its printing business to its PC segment. This transformation aligns with long-term growth opportunities, including the adoption of emerging technologies like generative AI, which enhances HP’s competitive edge.
Additionally, HP is poised to capture a larger market share with the launch of its next-generation AI PCs, which feature advanced AI capabilities and superior compatibility. The collaboration with Microsoft’s “Copilot+” and the use of AMD’s Ryzen AI chips are expected to differentiate HP’s products and drive growth in the AI PC market, which is projected to expand significantly. Despite current challenges, such as intense competition and declining demand in traditional printing, the stock’s valuation appears attractive, trading below peers’ average, with anticipated earnings growth in the coming years.
In another report released on February 28, J.P. Morgan also reiterated a Buy rating on the stock with a $40.00 price target.