HP Inc Delivers Decent Q4 Results With A Soft Outlook, Shares To Remain Under Pressure

Barclays expects the shares of HP Inc HPQ to remain under pressure in near term as a decent fourth-quarter results were offset by a soft outlook.

However, the brokerage still believes HP is a “quality holding” for capital-focused investors.

Quarter In Review

Following are the key numbers in HP’s quarterly print:

• HP Inc reports Q4 adjusted EPS $0.36 in line with estimates; revenue $12.5 billion versus $11.88 billion estimate.
• HP Inc sees Q1 adjusted EPS $0.35–$0.38 versus $0.38 estimate.
• HP wees FY 2017 adjusted EPS of $1.55–$1.65 versus the $1.61 estimate.
• Personal system revenue up 4 percent.
• Printing revenue fell 8 percent.
• Supplies revenue declined 12 percent.

Though HP benefited from a rebound in PC business, the printing woes continued to haunt the company and weighed on its outlook. Specifically, the supplies revenue was hurt by sales model change and the four box model.

“While HP expects the channel glut to ease by the end of F2017, we think it will test investors' patience as other self help stories may have more immediate inflection points,” analyst Mark Moskowitz wrote in a note.

Analyst's Take

Moskowitz has an Equal Weight rating on the stock, with a price target of $15.

“While the near term could be bumpy, the headwinds related to printing supplies are explainable and have an end point for resolution, albeit deferred to the mid- to long-term. We recommend holding the stock but not as an outsized or overweight position,” Moskowitz added.

At the time of writing, shares of HP fell 1.82 percent to $15.66.