By Senad Karaahmetovic

Citi analyst Jim Suva has downgraded HP Inc (NYSE) shares to Neutral, from Buy with a $38.00 target price. This is down from $40.00.

Citi has materially reduced the market expectations for PCs, resulting in the downgrade.

“Supply chain challenges, exacerbated by recent lockdowns, combined with the macro inflationary woes are likely to temper PC unit demand. We are now projecting 2022 unit growth to be -9%, contrary to previous forecasts of flattish. Our unit mix model will favor high-end units (Commercial and gaming), while Chromebooks (335-40 million units in CY21) will have the most impact. OEMs/ODMs prefer higher margins unit mix. We are not modeling units to decline to pre pandemic levels of ~250 mln units as we believe the active PC installed base is higher and mix shift to notebooks implies a shorter replacement cycle (relative to desktops),” Suva said in a client note.

Other analysts maintained a buy rating on Dell shares (NYSE:) as well as NetApp (NASDAQ) shares, while remaining bearish regarding Hewlett Packard Enterprise stock (NYSE).

Pre-open Monday saw HPQ stock fall 3%