Morgan Stanley warns HP stock could fall 30% despite earnings beat

Analyst

โดย TheStreet·

Summary · why it matters

Morgan Stanley reiterated its Underweight rating on HP Inc. and lifted its price target to $19 from $17, implying a more than 30% slide from the stock's Aug. 28 close of $30.52, even after HP's fiscal third-quarter revenue rose 12.5% to $15.7 billion and beat earnings expectations. Analyst Erik Woodring argues that growth came from higher prices, not more units sold, with PC shipments down 16% year over year, and he expects double-digit unit declines to continue into fiscal 2027 as memory-driven price increases weigh on demand. The firm also sees AI PCs as replacements rather than a catalyst for new purchases, and it projects Print operating margins to fall toward the low end of HP's 16% to 19% long-term target due to competition from Japanese rivals. Morgan Stanley's $19 target is based on a 7x price-to-earnings multiple on projected fiscal 2027 earnings of $2.75 per share, which is 9% below the Wall Street consensus of $3.02, and it assumes revenue falls about 1% and earnings per share drops roughly 16% year over year. Bank of America's Wamsi Mohan similarly kept an Underperform rating and an $18 target before earnings, and HP's dividend near 4% offers some cushion but does not erase the downside risk.