Nov 25 2015, 13:31 ET | About: HP Inc. (HPQ) | By: Eric Jhonsa, SA News Editor
What used to be HP's PC/printing unit (NYSE:HPQ) has plunged below $13 after missing FQ4 sales estimates on the back of 14% Y/Y sales drops for both its PC and printing segments, and cutting its FY16 EPS guidance below consensus.
With printing op. income (-18% in FQ4 to $862M) well above PC segment op. income (-17% to $294M), printing headwinds are getting a lot of attention. On the earnings call (transcript), CEO Dion Weisler stated weak market demand and price pressure both weighed on printing. "We do not expect the landscape to improve in the near future and we will constantly assess how the market evolves."
He added forex is affecting pricing, and that lower printer price points are "attracting buyers that might have different usage patterns then we originally targeted." Printing supplies revenue stabilization now isn't expected until the end of 2017. The growth of online/mobile document and photo sharing has been a major printing headwind for some time.
Needham's David Rold has downgraded to Hold just three weeks after upgrading to Buy on account of a low valuation and 3%-4% dividend yield. "[A]s some of the valuation argument has played out, we believe further upside will require real improvement in the underlying business. The sharp turn of the Printing market (and delay in improvement that results) in just 2-3 months since last speaking with the Street warrants caution..."
Likewise, Goldman's Simona Jankowski (Neutral) is worried about soft supplies demand (sales -10% in FQ4). "While the company intends to reduce its cost base to partially offset market headwinds, we would need to see evidence of supplies stabilization before becoming meaningfully more positive on HP Inc.’s trajectory."
Deutsche's Sherri Scribner (Buy) remains bullish. "While we do not expect HPQ to be immune to [market] trends, we believe the company can outgrow its peers and end markets, driven by market share gains and a focus on profitable growth opportunities. A recovery in supplies is a key driver of free cash flow strength longer term, and while we were disappointed by the push out of this recovery to later in FY-17, we believe [management] has the right tools in place to stabilize this business."
Recent HPQ News
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/13/2024 09:03:30 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 09/12/2024 09:03:01 PM
- HP Imagine 2024: Innovating for the Future of Work • GlobeNewswire Inc. • 09/12/2024 12:00:00 PM
- Nvidia, HP, Okta, Pure Storage Drop Post-Earnings; Salesforce, Nutanix, Affirm Surge • IH Market News • 08/29/2024 10:09:21 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/28/2024 08:18:14 PM
- HP Inc. Reports Fiscal 2024 Third Quarter Results • GlobeNewswire Inc. • 08/28/2024 08:15:25 PM
- U.S. Futures Edge Up as Nvidia Earnings Loom, Oil Prices Slide • IH Market News • 08/28/2024 09:52:22 AM
- Gamescom 2024 - HP Elevates the Gaming World through Customizable Solutions for a Personalized Player Experience • GlobeNewswire Inc. • 08/20/2024 10:00:00 AM
- Berkshire Reduces Stake in BofA, Hawaiian Airlines Soars 10%, Paramount Receives $4.3B Offer, and More • IH Market News • 08/20/2024 09:56:02 AM
- HP Awarded Frost & Sullivan's 2024 Global Customer Value Leadership Award for Its Outstanding Innovations in the Gaming Headset Industry • PR Newswire (US) • 08/19/2024 07:00:00 AM
- HP Awarded Frost & Sullivan's 2024 Global Customer Value Leadership Award for Its Outstanding Innovations in the Gaming Headset Industry • PR Newswire (US) • 08/19/2024 07:00:00 AM
- HP Inc. to Announce Third Quarter Fiscal 2024 Earnings on Aug 28, 2024 • GlobeNewswire Inc. • 08/07/2024 08:15:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/06/2024 09:22:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/06/2024 09:08:21 PM
- Form 3 - Initial statement of beneficial ownership of securities • Edgar (US Regulatory) • 08/06/2024 09:05:31 PM
- HP Expands Financing Options for Consumers Across All Credit Tiers • GlobeNewswire Inc. • 07/25/2024 12:00:00 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 07/18/2024 08:40:19 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/16/2024 09:00:11 PM
- HP Takes AI Leadership to the Next Level • GlobeNewswire Inc. • 07/15/2024 12:00:00 PM
- HP Inc. Appoints Karen Parkhill as Chief Financial Officer • GlobeNewswire Inc. • 06/26/2024 01:00:02 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/18/2024 08:31:41 PM
- Form 3 - Initial statement of beneficial ownership of securities • Edgar (US Regulatory) • 06/18/2024 08:30:27 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/17/2024 08:16:26 PM
- HP Inc. Names Fama Francisco to Board of Directors • GlobeNewswire Inc. • 06/17/2024 07:00:27 PM
- HP Study: Business and government leaders believe technology is key to expanding economic opportunity • GlobeNewswire Inc. • 06/12/2024 10:00:00 AM
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