By Connor Campbell, Financial Analyst, Spreadex
Stock of the day: HP Inc
Despite a bit of a wobble at the start of summer 2017 has been a pretty great year for HP (NYSE:HPE). After a steady rise across the first few weeks of 2017, the stock burst into lift on February 23rd as investors sent HP 8.6% higher off the back of its Q1 results. Revenue rose 3.6% to $12.7 billion, almost a billion dollars higher than the $11.8 billion forecast by analysts, while adjusted earnings were up 6% to 38 cents per share.
HP continued to climb in the months after, with things like a ‘Buy’ rating from Citigroup (NYSE:C) and a bullish note from UBS (NYSE:UBS) – thanks to forecast a revival in the PC market – helping send the stock to a high of $19.49 by mid-May. A week or so after that peak HP released its second quarter report – it was here that the stock got into a bit of bother.
Once again HP far outstripped analysts’ estimates, posting a 7% surge in revenue to $12.39 billion, compared to the $11.93 billion forecast, with earnings per share of 40 cents against the 39 cents anticipated. CEO Dion Weisler labelled it a ‘breakthrough quarter’ for the company, after its personal systems and print divisions both grew for the first time since 2010.
Yet after a brief spike in the hours after that Q2 update the stock sank, eventually falling below $17.50 between the end of June and start of July as tech stocks broadly fell out of favour with investors. Since then a string of positive ratings and price target upgrades have rescued the stock, with HP (briefly) crossing the $19.50 mark in August. HP Inc now sits at a current trading price of $18.57.
In terms of Wednesday’s third quarter statement, analysts are expecting a 3.3% rise in revenue to $12.28 billion but with a 12.5% dip in earnings to 42 cents per share. Investors, on the other hand, might be looking for a bit more given HP’s tendency to beat estimates in the last couple of quarters.
HP Inc (NYSE:HPQ) has a consensus rating of ‘Buy’ with an average target price of $19.78.
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