Reason for Drop in Value of HP Stock Today Unveiled
HP Inc. (HPQ) recently reported its Q3 2022 results, revealing a mixed performance and a cautious outlook due to the impact of inflationary pressures.
The tech giant posted a Q3 EPS of $1.08, which was better than the high end of management's guidance and analysts' expectations. However, the company's shares fell by 6% on Wednesday following the announcement of the financial results for the fiscal third quarter of 2022.
The lower guidance from HP includes a $0.05-per-share hit from its recent acquisition of video-conferencing hardware company Poly. Management's inability to fully offset the increased costs due to soft spending has raised concerns among investors.
Despite the EPS decline and inflationary headwinds, analysts have maintained a neutral to hold rating on the stock, with a price target around $30.46, implying roughly 12.7% upside from recent prices near $27.50.
HP's stock was down 0.54% as of noon ET on the day of the earnings release. The company's revenue for Q3 was $14.7 billion, a 4% decrease year over year.
The immediate outlook post-lowered guidance is neutral to cautious, with investor focus on HP’s ability to manage inflationary costs and maintain or improve margins in a challenging environment. However, the stock also shows value characteristics and moderate upside potential if HP executes well on cost control and product strategy.
Historical earnings have seen some negative surprises recently, with HP missing estimates in the previous four quarters by an average of 4.3%. Longer-term price forecasts from some models show steady growth in the mid to high $40s by 2028, reflecting expectations that HP can overcome current macro challenges over time.
Valuation metrics from mid-2025 show HP trading at a relatively low forward P/E of about 8.3, with a healthy dividend yield of approximately 4.3%, suggesting the stock might be seen as undervalued or a value play in the tech hardware sector.
In summary, the outlook for HP stock is cautious but shows potential upside depending largely on how the company manages margins and growth going forward. The bigger issue for HP seems to be inflation rather than the acquisition of Poly. Investors will be watching closely to see how HP navigates these challenges in the coming quarters.
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