HP's Challenges Unlikely To Ease Anytime Soon, Bear Analyst Says After Q3 Print

HP Inc’s (NYSE: HPQ) downbeat third-quarter revenue miss and reduction in fourth-quarter guidance were the largest of their kind in over five years, according to Morgan Stanley.

The HP Analyst: Erik Woodring reiterated an Underweight rating on HP while reducing the price target from $30 to $28.

The HP Thesis: The company witnessed challenges in both consumer and commercial demand, Woodring said in the note.

He added that HP’s performance was also impacted by a tougher macro environment, with high inflation, war and a stronger U.S. dollar as well as enterprise hardware budget cuts.

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While this was anticipated, the “magnitude of this slowdown on HPQ's fundamentals was even greater than we expected,” the analyst wrote.

“In our view, the litany of challenges that HPQ faces, including deteriorating demand, continued supply challenges, high channel inventory, a reversal of favorable pricing trends, unfavorable FX, greater competition, and lower-than-normal visibility, are unlikely to ease in the near term,” he added.

HPQ Price Action: Shares of HP lost 7.68% Wednesday, closing at $28.71. 

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