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Positive Commentary, But No Update On Guidance Expected From HP's Analyst Day This Week

Positive Commentary, But No Update On Guidance Expected From HP's Analyst Day This Week

Deutsche Bank expects HP Inc (NYSE: HPQ) to provide a positive commentary on the PC business, but do not expect an update to FY-16 guidance at the company's Securities Analyst Day on October 13.

The brokerage expects the company to focus on the long-term drivers of the business with updates on the new supplies strategy, PC market trends and new initiatives in 3D printing, graphics and the A3 market.

"We would also expect management to provide FY-17 guidance for very modest EPS growth and stronger free cash flow," analyst Sherri Scribner wrote in a note.

Scribner, who maintains his Buy rating on the stock, expects HP management to confirm the ongoing positive near-term trends in the PC market.

That said, Scriber expects management to provide conservative FY-17 guidance as both printers and PCs continue to face long-term headwinds.

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"We expect management to emphasize its ability to outgrow its overall end markets and continue to emphasize 3D print, the A3 copier market, and graphics as key growth areas," Scribner highlighted.

Meanwhile, the analyst anticipates management to provide higher year-over-year FY-17 free cash flow guidance, emphasizing its strong cash flow generation capabilities.

Moreover, key driver of Scribner's positive thesis is supplies turnaround despite sales down 18 percent year-over-year in the third quarter as this segment is crucial to the company's cash flow and profitability.

At the time of writing, shares of HP were up 0.71 percent to $15.69. Given positive PC data points and higher value-tech multiples, the analyst raised price target to $18 from $15.

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Latest Ratings for HPQ

Apr 2019Initiates Coverage OnNeutral
Feb 2019MaintainsMarket PerformMarket Perform
Feb 2019DowngradesBuyUnderperform

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