Enrique Beliefs, CEO, HP
Scott Mlyn | CNBC
Shares of HP closed down more than 6% on Wednesday morning after the printer and PC maker rescued fiscal third-quarter earnings that underwhelmed Wall Street.
HP reported $13.2 billion in revenue, below the $13.37 billion assumed by analysts, according to Refinitiv. Adjusted earnings per share came in line with expectations at 86 cents. The callers also offered weak guidance, citing the fact that PC pricing has not improved as much as it had hoped.
Analysts at Bernstein estimated HP’s quarter was “disappointing,” but that PC revenues will likely improve going forward. However, the analysts wrote that the corporation’s printing business may be more of a sticking point.
“Weak printer shipments may impact supplies growth in the medium interval, HPQ’s margins remain above pre-pandemic levels, and we worry about the structural health of the printing business and its ability to become more pleasing to mature over time,” the analysts wrote in a Wednesday note.
Similarly, analysts at Credit Suisse said HP’s print slice remains their biggest concern, especially because of discussion about “long term weakness” and a possible constraint for “more aggressive pricing.” The analysts wrote in a Wednesday note that they are lowering their fiscal fourth-quarter judges and fiscal full-year estimates for the company.
Deutsche Bank analysts also trimmed their outlook for HP and lowered their evaluate target from $32 to $30. They said the company delivered results that were “roughly in-line” but that it has been modified by “weaker demand driven by slower recovery in China,” as well as a gloomy long-term outlook for its print business.
The same so, the Deutsche Bank analysts said there are positive components of the report.
“Despite a tough demand environment, we be prolonged to be impressed with HPQ’s ability to generate solid operating margins for both segments,” the analysts wrote Tuesday. “We are also helped that the company plans to restart share repurchases to at least offset dilution in the near term.”