On Thursday, BofA Securities adjusted its stance on HP Inc. (NYSE:HPQ), raising the price target to $35 from the previous $32, while reaffirming its Buy rating on the stock. The adjustment comes ahead of HP's anticipated financial results for the second fiscal quarter, which are set to be released after the market closes on May 29th.
The BofA analyst anticipates that HP's earnings per share (EPS) for the fiscal second quarter will align with the midpoint of the company's guidance, which ranges between $0.76 and $0.86, as well as with Wall Street's estimate of $0.81. Despite a projected revenue of $12.5 billion by BofA, which is slightly below the Street's expectation of $12.6 billion, the firm's outlook remains positive.
Looking forward to the fiscal third quarter, BofA estimates HP's revenue and EPS to be $13.2 billion and $0.82 respectively. These figures are compared to the Street's higher estimates of $13.5 billion in revenue and $0.85 EPS. The firm's projections reflect a cautious but optimistic view of HP's performance.
The recent exit of Berkshire Hathaway (NYSE:BRKa) from its position in HP was also noted as a significant event. According to the analyst, this development has removed an overhang on the stock, potentially clearing the path for its future growth.
InvestingPro Insights
As HP Inc. (NYSE:HPQ) gears up to release its fiscal second quarter financial results, InvestingPro data and tips provide additional context for investors considering the company's stock. HP boasts a strong shareholder yield and has demonstrated commitment to returning value to investors, having raised its dividend for 7 consecutive years, a testament to its financial stability. Furthermore, the company's stock is currently trading at a low P/E ratio of 9.08, suggesting that it may be undervalued relative to its near-term earnings growth prospects.
InvestingPro data highlights HP's significant market cap of $30.69 billion, alongside a robust revenue of $53.1 billion over the last twelve months as of Q1 2024. Despite a revenue decline of 11.02% during the same period, the company has maintained a gross profit margin of 21.86% and an operating income margin of 8.2%. These figures may reassure investors about the company's ability to manage costs and maintain profitability amidst challenging market conditions.
For those looking to delve deeper into HP's financial health and stock performance, there are additional InvestingPro Tips available, providing insights such as the company's valuation implying a strong free cash flow yield and its history of low price volatility. With these factors in mind, investors can make a more informed decision on whether to follow BofA Securities' optimistic outlook on HP. To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 8 additional tips listed on InvestingPro for a comprehensive analysis of HP Inc.
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