By Senad Karaahmetovic

HP (NYSE 🙂 decreased its adjusted earnings per share outlook for full year while shares were slightly higher premarket.

The $1.08 adjusted earnings per share (EPS) was higher than the $1.05 consensus estimate. The net revenue was $16.5 billion which is also higher than the $16.14 billion estimates.

HP anticipates Q3 adjusted earnings per share in the $1.03-$1.08 range, while analysts expected $1.04/share. According to analysts’ estimates, the adjusted FY EPS will be $4.24-$4.38. This is a decrease from the $4.18-$4.38 forecast. Analysts were expecting $4.26 per share. HPQ anticipates FY cash flow free of charge of $4.5 billion. This is almost the same as estimates of $4.48 trillion.

Enrique Lores CEO stated, “Collectively our key growth companies grew by double digits to drive $5.6 billion in revenues in the first half”

Wamsi Mohan, a BofA analyst, reiterated the Underperform rating for HPQ shares and set a target price of $33.00 per share.

“We reit Underperform given: 1) we see risk to F22 FCF target of at least $4.5bn as is predicted on improved 4Q PC rev, 2) increased competition in PC can be headwind to margins, 3) we expect ASPs for print/PC to trend lower as supply issues ease, 4) magnitude of beats vs. Street has been declining over the past several quarters suggesting a possible peaking of the cycle, and 5) we expect moderation of buybacks F23 onwards (vs. elevated F22 levels). In our opinion, HP’s Print and PC segments are primed to mean revert after cyclically overearning during COVID,” Mohan told clients.

Jim Suva from Citi, Citi Analyst, lowered the price target of the Neutral-rated HPQ stock by $38.00 per Share to $40.00

“HP Inc had good results where sales beat by +2% and EPS by +3% followed by an EPS outlook that is +3% higher. It is a good result, but it’s important to keep an eye on the shares as Dell reported stronger results. The consensus will probably move slightly up, but not significantly. We expect the target price to rise slightly from $38 to $40 if earnings are higher and if we can roll forward one quarter. We maintain our Neutral rating as we prefer Dell given the valuation discount of Dell and the shift from consumer to enterprise demand benefits Dell more than HP Inc,” Suva said in a client note.