What to Watch For When HP Reports After the Close

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HP Inc. (NYSE: HPQ) is scheduled to release its fiscal fourth-quarter financial results after the markets close on Thursday. Consensus estimates are $0.54 in earnings per share (EPS) and $15.1 billion in revenue. In the same period of last year, HP posted $0.44 in EPS and $13.93 billion in revenue.

PC shipments worldwide are flat, with headwinds for consumer preferences for tablets and smartphones. China-based Lenovo has taken the lead in market share, leaving HP in second place.

In the calendar third quarter, shipments worldwide rose only 0.1% to 67.2 million. Commenting on the trend, Mikako Kitagawa, principal analyst at Gartner, said:

The PC market continued to be driven by steady corporate PC demand, which was driven by Windows 10 PC hardware upgrades. We expect the Windows 10 upgrade cycle to continue through 2020 at which point the upgrade demand will diminish. Despite the third quarter typically showing strong consumer PC sales due to the back-to-school season, weakness in consumer PC demand continued, offsetting the strong sales in the business market.

Lenovo’s success was driven by a 10.7% rise in unit sales to 15.9 million, which gave it 23.6% of the market. HP’s shipments rose only 6.2% to 14.6 million.

Excluding Thursday’s move, HP had performed just a bit better than the broad markets, with its stock up 8% in the past 52 weeks. In just 2018 alone, the stock was up 11%.

A few analysts weighed in on HP ahead of the results:

  • Argus has a Buy rating.
  • JPMorgan has a Neutral rating with a $29 price target.
  • Susquehanna has a Hold rating and a $25 price target.
  • Merrill Lynch has a Buy rating with a $30 price target.
  • UBS has a Buy rating with a $30 target price.
  • BMO has a Hold rating with a $22 price target.

Shares of HP were last seen down 2% at $22.95 on Thursday, in a 52-week range of $19.31 to $27.08. The consensus analyst price target is $27.38.