Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
HP Inc. (NYSE: HPQ) faced a setback on Tuesday as Citi analyst Asiya Merchant downgraded the computer maker’s stock from Buy to Neutral. The downgrade, which comes after HP’s stock had gained 19% year-to-date, is based on concerns about prolonged recovery in both the PC and printer markets.
Despite maintaining a price target of $37, the news sent HP’s stock down 1.8% in premarket trading to $35.22.
Citi Downgrades HP from Buy to Neutral
Merchant’s decision to downgrade HP stems from expectations of a longer recovery time for the PC market. The analyst cites a protracted near-term PC refresh opportunity due to macro uncertainty and a delayed impact of AI-capable PCs on demand, which will likely materialize further into 2026/2027. Additionally, continued pressure on HP’s printing business, including increased competition in Japan and concerns about the China macro environment, contributed to the downgrade.
Citi’s view on HP reflects a cautious outlook on the PC ecosystem. Recent checks suggest a protracted refresh cycle, with the PC market recovery taking longer than previously expected. While introducing AI-capable PCs may boost demand, Citi believes this impact will likely continue in the future.
The printing business faces challenges, including competition in Japan and China. These pressures and other factors, such as the delayed AI impact and China’s macro environment, are expected to temper valuations in the near term.
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HP Stock Performance and Key Metrics
As of 9:57 AM EDT on Tuesday (at the time of writing), HP’s stock was trading at $34.38, down $1.49 or 4.15% from the previous close.
The company’s market capitalization stood at $33.122 billion, with a trailing P/E ratio of 12.59 and a forward P/E of 10.20. HP’s earnings per share (TTM) were reported at $2.85, and the stock offers a dividend yield of 3.62% based on a forward dividend of $1.25.
Despite the recent downgrade, HP’s stock has shown strong performance over various timeframes. The stock’s year-to-date return of 17.14% slightly lags behind the S&P 500’s 19.83%, but it has outperformed the broader market over longer periods.
HP’s 1-year return of 38.40%, 3-year return of 38.73%, and 5-year return of 113.97% all surpass the S&P 500’s performance over the same periods. HP’s next earnings report, expected between November 21 and November 25, 2024, should provide further insights into the company’s performance and outlook.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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