Argus Issues Bullish Commentary On HP Following Q4 Report

HP Inc HPQ posted solid fourth-quarter results, backed by strong sales by its PC business, particularly in the notebook space. In the company’s printing business, supplies revenue seems to be on track to stabilize by yearend F2017, Argus’s Jim Kelleher said in a report.

Kelleher reiterated a Buy rating on the company, while raising the price target from $19 of $22.

Q4 Review

HP reported total revenue growth of 4 percent year-over-year, driven by 10 percent growth in PC revenue. In the notebook space, both units and revenue grew by double digits, “supporting solid demand growth across all regions for the personal systems business,” the analyst mentioned. Due to tough comps, non-GAAP EPS rose by merely 4 percent, despite the solid top-line growth.

HP’s printing business struggled through 2016 and “has become the company’s primary focus for realignment and restructuring,” Kelleher noted.

Related Link: HP Still Has Some Printing Health Concerns

The company returned more than $600 million to shareholders via share buybacks and dividends, while pushing net debt down nearly $100 million to $457 million.

“We believe that HPQ is managing through secular transitions and cyclical challenges, while maintaining and even raising margins. Amid continued challenges, HPQ appears positioned to take market share in PCs, printers, and commercial graphics,” the analyst wrote.