HP Stock Is Down as Another Analyst Notes Weaker Demand for PCs
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Ten out of 18 Wall Street analysts rate HP stock at Neutral.
Simon Dawson/Bloomberg
Shares of HP were falling on Monday after another analyst lowered his ratings on the computer hardware company’s stock due to reduced growth in demand for personal computers.
Citi analyst Jim Suva downgraded
HP
shares to Neutral from Buy and cut his target for the price to $38 from $40. The stock (ticker: HPQ) was down 3% to $33.69 in premarket trading on Monday. HP has fallen 8% so far this year.
Suva is the latest in a series of analysts to note that PC unit sales are slowing down for the near to mid term. In March, Morgan Stanley analyst Erik Woodring cut his ratings on Dell Technologies (DELL) to Equal Weight from Overweight, moving HP to Underweight from Equal Weight. Barclays analyst Tim Long took a cautious stance on the PC stocks, downgrading HP to Underweight from Equal Weight, in January.
To be sure, Suva does see HP as strong in terms of its operations and ability to generate cash flow. But “challenging PC shipment growth and higher freight costs are likely to limit operating income growth and EPS upside here in FY22 as Personal Systems segment was a key driver of operating income growth in FY22E,” he wrote. Global shipments of personal computers fell 5.1% in the first quarter from a year ago, according to International Data Corp, a market researcher.
At the same time, the company continues to face pressure in China as the country seeks to replace foreign PCs with domestic ones, Suva said. China represents about 8% of PC unit sales for HP.
A majority of analysts on Wall Street share Suva’s view on ratings. Ten out of 18 analysts rate HP as Neutral, while four are bullish and four are bearish.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
