Market Overview

Goldman Sees 'Significant' Challenges At HP

  • The split of Hewlett-Packard Company (NYSE: HPQ) creates two entities - a business-focused company named Hewlett-Packard Enterprises (NYSE: HPE) and a company with the remaining operations named HP, Inc. (NYSE: HPI).
  • Goldman Sachs’ Simona Jankowski initiated coverage of HP Inc. with a Neutral rating and the price target of $14.
  • HP Inc. is expected to be adversely impacted by secular declines in PCs and printing, Jankowski mentioned.

HP Inc., which is the “remainco” after the spin-off of Hewlett Packard Enterprise from Hewlett Packard, includes the PC and printing businesses. This entity is scheduled to commence trading after the spinoff is completed on November 1.

Analyst Simona Jankowski said that the Neutral rating reflects the balance between attractive valuation and capital allocation “with the fundamental challenges related to secular declines in PCs and printing.”

HP Inc.’s revenues are divided between PCs and printing in a ratio of about 60:40. However, the operating profit split is approximately 20:80, since PCs generate a 3 percent operating margin, versus 18 percent by printing, Jankowski commented.

Both segments are declining due to a downturn in industry revenues. “Industry declines are driven by smartphone cannibalization for PCs and by the move to digital for printing,” the Goldman Sachs report stated.

Jankowski expects HP Inc.’s sales to decline by 7.7 percent in FY15, following a CAGR of -2.6 percent in FY12-14. The CAGR for FY16-17 has been projected at -2.6 percent as well. Revenues in FY16 are expected to be negatively impacted by forex headwind, since the company competes with several Japan-based printing vendors.

Jankowski projected “flattish” operating margins in the 8.8-9.0 percent range and a share count CAGR of -3.5 percent, resulting in an EPS CAGR of -1.3 percent through FY17.

Latest Ratings for HPQ

Nov 2019MaintainsEqual-Weight
Oct 2019DowngradesNeutralSell
Oct 2019DowngradesBuyHold

View More Analyst Ratings for HPQ
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Simona Jankowski VetrAnalyst Color Initiation Analyst Ratings


Related Articles (HPI + HPQ)

View Comments and Join the Discussion!

Latest Ratings

CATStandpoint ResearchDowngrades
LULUWells FargoMaintains260.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

More Evidence Processed Meat Causes Cancer: 10 Companies Reeling From The News

UPDATE: IntercontinentalExchange Announces to Buy IDC from Silver Lake for $3.65B in Cash, $1.55B ICE Common Stock