HP Inc. Stock Rises Amid Anticipated PC Market Recovery
In a significant assessment underscoring the potential upliftment of the PC industry, HP Inc. appears set for a notable rebound, with its stock experiencing a 2% surge to $28.71 on Wednesday. This development comes amidst the company's struggle, marking a 4.6% decline year to date. Stephen Bersey, the head of technology research at HSBC Global Research, optimistically upgraded HP stock to "Buy" from "Hold," setting the price target at $33, up from $30. This strategic move highlights the anticipated recovery and growth within the PC market.
The PC industry, after facing a prolonged period of challenges and declining year-over-year sales, is on the cusp of revitalization. Bersey's analysis predicts a resurgence driven by three primary factors: a refresh cycle for laptops purchased during the early stages of the pandemic, increased enterprise demand sparked by Microsoft's decision to end support for Windows 10 in October 2025, and the introduction of artificial-intelligence PCs by HP and other companies.
Global PC Shipments experienced a 3% increase in the fourth quarter of 2023, hinting at the sector's gradual recovery. This positive trend is expected to gain momentum, with projections indicating an 8% rise in PC shipments for 2024. As the second-largest global PC vendor, HP is well-positioned to capitalize on these developments, potentially aligning its trajectory with the broader sector's revival.
Bersey underscores HP's capability to navigate the sector trends successfully, forecasting a 3.9% growth for HP’s Personal Systems segment (the company's PC business) for the fiscal year ending in October 2024. Impressively, a 6% growth is anticipated for both fiscal years 2025 and 2026. Furthermore, the company's recent quarters have shown an improvement in gross margins — a trend that is expected to continue, bolstering HP's financial health and operational efficiency.
As the PC market gears up for a brighter future, HP Inc.'s strategic positioning and adaptability make it a promising investment for those looking to capitalize on the sector's recovery. With substantial growth on the horizon, driven by significant technological advancements and changing market dynamics, HP stands ready to meet the evolving demands of both consumers and enterprises alike.
For more detailed analysis and insights, write to Eric J. Savitz at Barron's.
Keywords: HP Inc., PC market recovery, PC shipment growth, artificial-intelligence PCs, enterprise demand, technology research, stock upgrade, financial health
Analyst comment
Positive news: HP Inc. stock rises amidst anticipated PC market recovery. Analyst predicts a revival driven by laptop refresh cycle, enterprise demand, and AI PCs. Global PC shipments increased, with projections showing further growth. HP well-positioned as second-largest PC vendor. HP’s Personal Systems segment expected to see growth in the upcoming fiscal years. Improved gross margins contribute to financial health and operational efficiency. Promising investment for those capitalizing on the sector’s recovery.
