HP Inc. (NYSE:HPQ) reported better-than-expected quarterly results, and an analyst at Wells Fargo Securities commended the company for a positive quarter.
The HP Analyst: Aaron Rakers maintained an Equal-Weight rating and $35 price target on HP shares.
The HP Thesis: HP delivered amid concerns over slowing/choppy PC demand dynamics and increasing print supply constraints that is expected to last through 2022, Rakers said.
Revenues at the Personal Systems Group climbed 15% year-over-year, ahead of the consensus estimates, while Imaging and Printing Group saw revenues fall 4.2%.
"We believe a notable takeaway from HP's results is the company's execution on a positive mix shift — e.g., commercial PCs, premium consumer PCs, gaming PCs, and peripherals," the analyst wrote in the note.
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The company also increased its 2022 earnings per share guidance and reiterated its free cash flow guidance, the analyst noted. Among the business segments, HP is calling for a high-single-digit revenue decline for PSG in the second quarter, he added.
Favorable pricing will likely push margins of IPG above the 16-18% range, Rakers said.
HP Price Action: At last check, HP shares were slipping 0.5% to $34.23.
