HP Inc. (HPQ, Financial) is down 9.01% to $30.15 as of 9:41 AM ET following its fiscal Q1 2025 results and a weaker-than-expected Q2 earnings outlook, which has drawn mixed reactions from analysts.
Evercore remains bullish on HP, keeping an Outperform rating and a $40 price target, noting that the company maintained full-year guidance despite ongoing challenges. HP's Personal Systems (PS) segment grew 5%, with commercial PC sales jumping 10%, driven by Windows 11 refreshes and AI PC adoption. However, consumer PC revenue declined 7%, and printing revenue slipped 1%.
The firm also highlighted tariff-related headwinds from China, which HP has partially mitigated by stockpiling inventory and making supply chain adjustments. HP aims to reduce U.S. revenue exposure to China to just 10% by the end of fiscal 2025. Additionally, HP increased its Future Ready cost-saving plan by $300M, now expecting $1.9B in savings by year-end.
Morgan Stanley, however, took a more cautious stance, lowering its price target to $35 from $36 while maintaining an Equal-weight rating. Analyst Erik Woodring noted that HP's Q2 EPS guidance came in $0.05 below expectations. He also pointed out that first-half EPS will only account for 43% of the annual total—a 10-year low—suggesting HP is betting on a steep profitability ramp in the back half of the year.
Analysts see strong PC demand and cost cuts as potential tailwinds, but with market uncertainties still looming, HP's ambitious second-half profitability forecast is under scrutiny.
