HP Remains In A Position Of Strength

HP Inc. (HPQ) got a lift today after last night’s analyst meeting. Management did not formally change fiscal fourth-quarter guidance, only noting that the environment remains difficult. However, the fact that the company did not guide lower is helping the stock rally in relief.

As it is, the long-term outlook was upbeat. The company believes PC shipments should increase on average 4% per year, as Artificial Intelligence will require more computing power. While HP is still a strong player in computing, market share is now only 10% . . .  a number management believes it can expand.
HP was less optimistic about the future growth of printing, looking for demand to be flat through 2026. Still, on a combined basis, management believes they can grow revenues 2% to 4% a year, get enough operating leverage to boost income and then continue buying back enough stock to keep EPS moving in the right direction.
While I think the growth projections may be a little optimistic, the stock is discounting an implausibly bad scenario in my opinion. I look for the recent rebound in the stock to continue. HPQ remains a buy under $28 as I target $31.