HP Stock: Quarterly Results Disappoint Investors

HP's second-quarter fiscal 2025 results have triggered significant market disappointment, with the stock experiencing a notable decline in after-hours trading. The tech giant reported earnings per share of just $0.71, substantially missing both Goldman Sachs' forecast of $0.82 and the general market consensus of $0.80. The shortfall primarily stemmed from the Personal Systems division, where operating margins reached only 4.5% against expectations of 5.7%. HP cited unexpectedly high tariff costs as the main culprit, which impacted earnings by $0.12 per share—triple the burden projected in February. This performance prompted Goldman Sachs to slash its price target from $33 to $26, while maintaining a "neutral" rating. Despite these challenges, the company did report modest revenue growth, with total quarterly sales reaching $13.2 billion, slightly exceeding the projected $13.07 billion.

Management's Recovery Strategy

The company's leadership has outlined countermeasures to address these setbacks. By the fourth quarter, HP plans to eliminate tariff burdens by ceasing all China-to-US product sales beginning in June. Additionally, management is banking on its newly introduced AI-powered PC portfolio to deliver significant contributions by year-end. However, market sentiment remains cautious as HP revised its PC market growth forecast downward for fiscal 2025, from mid-single digits to low-single digits, citing ongoing macroeconomic uncertainties. Meanwhile, the printing segment showed some resilience with an improved operating margin of 19.5%, surpassing internal targets.

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Source StockWorld